Transcript from John Patrick speech in Geneva, Switzerland : Post-Expo 2000 Strategic Conference Programme Its Challenges, Its Business And Its Offering In Logistics And Communications.
Session chairman – Samuel M Jabbour, director postal technology, Universal Postal Union
DAY TWO – Wednesday 4th October 2000
Session 5 – E-Business Perspectives The Future of the Internet
Thank you very much and good morning. It’s nice to be here with you. I’m going to start off with a sound check (plays cd stereo digital music)… well, I could listen to that all morning, but I won’t, I’ll move on. If you don’t know how to create your own digital play list by the way, and how to take your CD collection and convert it to a digital music collection, then I highly recommend that you talk to your kids and they will tell you how this is done and bring you up to date on the latest with Jabba and Newtella and other things that are happening in the world of digital media. In fact, our children hold the keys to many aspects of the future of the Internet and I’d like now to talk a bit about where one fellow traveller sees the future of the Internet and I’ll start with the big picture.
From a big picture point of view, we’re at the very beginning. The number of people actually doing something on the Internet right this very second, as a percentage of the world’s population, rounds off to zero. There’s nobody connected. We are at the very beginning. Now, if you select a demographic, where you believe there is a very high percentage of people utilizing the Internet, but then look at what they are actually doing on the Internet as a percentage of what they could do or would like to do on the Internet, you again will find that it rounds off to zero. We’re at the very beginning. Every day we read more about the digital economy, about these e-marketplaces and we are rapidly transforming from economies to e-conomies. Many of the CEO’s I talk to say ‘John, I have had e-nough hearing about this’, but, it will not go away because we are at the very beginning. Open systems are changing information technology dramatically and, lastly, as part of the big picture, the power of a click and I think in many ways this is the most important aspect of the future of the Internet, in particular in thinking about the issues that all of you are concerned about. I’m not talking here about anarchy, I’m not talking about people marching in the streets, I’m talking about the power of an individual with a mouse button or a cell phone button in their hand and the economic statement that they make when they click, and many institutions are in denial about this transfer of power from institutions to people, but make no mistake, it has happened and it has changed the world forever and we need to listen very carefully to this transfer of power because in it lies the secret to success.
Now the next generation of the Internet is well under construction and is about to make today’s Internet appear primitive. Of course it is somewhat about speed, but, it is also about six other characteristics and I would like to briefly touch on these aspects of the next generation of the Internet which is unfolding right this very moment.
Let’s start with speed. Everyone would like to see more speed and here I stand saying we will be awash in bandwidth. That’s a fairly bold statement, in particular, given that in my hotel room last night here in Geneva, the best I could achieve was 7,200 bits per second, and I was relieved to get that in order to get my e-mail, and so when I say awash in bandwidth you may think I’m crazy, but the fact is that the competition between DSL and cable modems and broad band wireless is having a dramatic impact in those markets where they all exist, and more and more markets are now opening themselves up to these various alternatives and what we see happening is in effect, Adam Smith’s invisible hand at work on bandwidth. Make no mistake, this bandwidth will come and it is coming rapidly and the largest mistake we could make would be to assume that people will not have speed and, in fact, this speed will have dramatic impact, first on video, here’s video today, this is video on the Internet as you might see it today…(video clip). I’m now going to show you that exact same video content on the next generation of the Internet backbone which we currently have operating, same content…(video clip). Look like television? You bet!
Now, what does it mean to have high quality, jitter free, full screen video over the Internet? Well, it has many implications. First and foremost is the introduction of geo-independence where experts, you know what experts are, they’re people who live on aeroplanes, experts now will live on video walls, professors will deliver lectures across continents, doctors will collaborate on surgical procedures and we will have dramatic impact in medicine and education and, of course, in customer service as a result of this video move to the Internet. Now, people are going to expect a much higher level of content. We already have millions of people with high-speed access, expanding rapidly and those people who have it will expect something different than those who don’t have it and so this makes it incumbent upon all of us, as providers of content in various ways to make sure that our content is creative and captivating. Let me show you an example of some content that I’ve found recently that I think is very creative…(video clip). So how’s that for a Web page. Now, there are many implications to the speed. The bottle necks are going to shift away from the last mile, back to the server, the specialised computers that deliver the content. Organisations are going to need very large, very powerful, scalable servers and at IBM we like this part of the problem. The content will be closer than you think. While content bottlenecks will move back to the server at the same time, the content will be much more highly distributed out to the edges of the network and we will begin to see the content in fact broadcasted from satellites and distributed from Internet service providers out to set pop servers and out to very specialised devices perhaps on telephone poles in our neighbourhoods and round the world, highly distributing the content the result of which is a very fast, very responsive Internet.
Now, secondly, the Internet will be always on. Today it is not always on, today we have to dial and connect to the Internet and this is a laborious process that goes something like this…(noise of connecting to Internet). You know, some of you actually enjoy hearing that sound. It is music to your ears to get connected and when you get connected and you’re ready to do something…(error sound), Oh, now you’re not connected anymore and you have to start over again and so this is the world we live in today and it is soon going to be replaced by DSL and cable modems and wireless, enabling us to be just always on. Now, when you’re always on instead of having to log on, your propensity to do something changes dramatically. Your propensity to print a postage stamp or to go and learn something or to be entertained or buy something is quite different than when you had to log on. Also, we will begin to think of the Internet as a capability to deliver things other than the Web. Most people today think of the Web and the Internet as one and the same thing. The reality is that the Internet is the underlying communications mechanism and the Web is just one application for delivering content, there are many other possibilities, such as this weather box for example which delivers real-time streaming data coming from the roof of a house of a colleague of mine on the Isle of Wight off of the coast of England – a hundred dollars worth of Radio shack equipment delivering real-time data, distributed through the Web through a published and subscribed model enabling us to find the weather at any point in time from anywhere on this person’s home. You could imagine also connecting over the Internet to the pacemaker of a loved one to monitor a condition and we will soon begin to see many real-time data acquisition examples of the use of the Internet. For example, you may be riding to work on the train and realise that the blinds in your home were left up and you meant to close them. You go to your cell phone, you check the status of the blinds, you connect to your home which, of course, is always on. When you connect to your home, you select the down setting for your blinds, push the button on your phone and down go the blinds.
So, this is just the beginning of the many capabilities that will be possible when we begin to think of the Internet as always on.
Now, number three, the Internet will be everywhere. Today the Internet is not everywhere, today the Internet is where our PC is. Where is the Internet? It is wherever your PC is. Well, that’s going to change dramatically. Perhaps the biggest change that we can see with the Internet over the next couple of years. Today, 95% of Web pages are delivered through a browser on a PC. For example, the weather underground as you see it here on a PC, 95% of Web pages are delivered this way. That 95% is about to drop to 40%, not because of a decline in PC’s, the PC will continue to grow, but the era of the PC as the centre of innovation for the Internet is over and it is over because of the birth of many other kinds of devices, of course, the TV which for many people will be a TV, but some percentage of the time it actually will be their browser to see that Web page. Other people will prefer to use the pager and other people still will prefer to use the digital assistant. This little hand-held computer for many people will be their only computer, their only computer, not for me and perhaps not for many of you, but, for millions of people this will be not only their browser but their only computer.
Then, of course, there’s the phone. The phone is having a dramatic impact on the Internet. In Japan in the month of May, Japan became the first country where more than 50% of all Internet accesses to the Web were made from a telephone and what is going on with Docamo is the tip of the iceberg and when you see teenagers sending pictures of each other over the Internet using their I-mode phone, you know that there’s been some dramatic change. Here in Europe, of course, there’s been some discussion about utilising the phone in some ways as a replacement for the smart card, containing a digital certificate and enabling electronic commerce. Handelsbanken in Sweden for example, is now offering mainframe banking applications over the telephone. America is slowly catching up, hoping to have a more ubiquitous standard and moving to bring applications to the phone, as is Asia and Europe.
Other people will use the kiosk. The kiosk is an important access point to the Internet for those people who don’t want or can’t afford any device and we see these on street corners. I can foresee them in the jungle on platforms, in schools, in churches, in Government buildings, enabling people to have access to transactions and this is quite important because the cost of the Internet as a communications mechanism is so compelling that all transactions will move to the Internet and the kiosk will become a principle method.
And then, of course, there are many new Internet consumer devices. This is an Internet …………… radio. When you plug the Internet into the back of this radio, on the right there you see a tuning knob and on the left is the volume control, enabling you access to five thousand Internet radio stations.
Many devices will come onto the scene, not one device that does everything, but many different devices, because we’re all different. Some of us prefer a PDA that looks like a phone, some prefer a phone that looks like a PDA and we will see all combinations of these just as we see in other consumer devices. The difference being that they will all be offering persistent connections to the Internet.
Now, some people will use all these devices, depending upon who they are and where they are and what they’re doing. Now the phone becomes very ………… to the Internet through applications. At IBM we’re experimenting with several things like this. This is called Blue Pages. It is a directory of all employees at our company and I’m going to type in a few characters of a person’s name, I select it, it sends a request to Blue Pages which is an L-dap directory of all employees at IBM, it shows me the choice here to call this person, or I can send an instant message and I’m going to take that choice. Now I have a menu of what kind of an instant message I want to send – call me now, call me in five minutes, help I’ve fallen and can’t get up, or other messages. I’m going to take the simple message, call me in five minutes and that message will now be sent to my desktop. It arrives at the desktop and now that person receiving the message can reply to that message and the message will return back to the phone. This is a very important integration now, enabling the phone to bring the Internet to where you are, so, no longer will the Internet be where your PC is, the Internet will be where you are.
Now, instant messaging is a key part of this next factor which I call natural and in fact I think instant messaging is the next really big thing. You may think of instant messaging today as something used by teenagers and in fact it is used by tens of millions of teenagers, they get home from school, they make a b-line for the PC not to use a Web browser and search the Web, that’s old fashioned stuff, they go to ICQ or AOL Instant Messager so that they can chat with their buddies that they just got off of the bus with. But, that’s not what I’m talking about here. I’m talking about business use of instant messaging. It’s not just chat. It’s the ability to establish presence, to know who is on-line and have access to that person on an instant basis, to be able to create a back channel of communications. We have 240,000 users of this at our company and I can tell you, if we turned it off, we would have mutiny. It has become so fundamental to our ability to communicate, in particular as we all travel more, because the Internet allows us to travel more, we can be where we need to be with clients or at conferences such as this, but still have the need to be able to communicate. So you’re attached to a single phone line in an hotel at a very slow rate and yet, through instant messaging, your assistant or colleagues can reach you and a message pops up on your screen and you can answer them. This is a very powerful way to amplify and make more productive the way we work together. I’m going to show you an example here. I selected Frank Schleptenburg and I’m going to send Frank a message. ‘Frank, how’s the weather in Heidleburg?’ and I’m going to send this message to Frank…(sounds of the message spoken in German). Now, I typed that message in English, unfortunately, the only language that I know and it was translated on the fly to German, it was then played using a text to speech technology, it was played to Frank, Frank answers me in German ‘John, it is cold and rainy’, Frank says it is always cold and rainy in Heidelburg. Now, think about what we have here. When you combine instant messaging with voice recognition, with machine translation, with text to speech and you get a real-time multi-lingual intercom. Think about a person asking a question of customer service in Spanish and having that question be routed to the most knowledgeable person on that particular question, who answers it in Mandarin and the questioner hears the answer in Spanish. This is a game-changer in the form of customer service. At the bottom of the buddy list here you will see a series of what we call bots. A bot is a robot, a software robot that can perform various functions, such as, for example, Blue Pages. I might say ‘Who is Michael Nelson?’ and I send that message to Blue Pages which is not a person, but rather is a bot and that bot returns the information about this particular person. You can envision many applications with these simple bots to look up a stock quote, to look up the definition of something, like for example, I might say ‘What is NGI?’. ‘Next generation of the Internet’, click here to learn more. So this concept of utilising simple applications like the instant messaging application, as a communications centre, I believe is an evolving and important area of the Internet. It doesn’t require a browser. Browsers will recede to what they started as, which is something very useful for browsing text, but for simple applications such as bringing up something to print a stamp for example, does not really require a browser and, in fact, the stand alone desktop integrated application would be a very much more highly productive and simple way, rather than to interrupt your browsing that may be going on.
Now, the next logical extension of this process is in electronic meeting. Now, what you see happening here is that these two people are having this meeting. These people may be on different continents in a time zone that makes sense to them to have a meeting. Electronic meetings are having a dramatic impact in our company and it can in any company and it is important because it allows you to have a meeting, and I don’t know about you, have you ever had the case when you need to meet with someone but they’re busy?
“The boss, I need to see the boss.”
“Well, the boss is out of town.”
“Well I need to see the person this week, it’s important, I need to review next year’s budget.”
“Well, I’m sorry, he’s not here, he’s out of town.”
Well, that doesn’t happen any more when you have electronic meetings. One thing I’ve discovered is that people are always somewhere and as long as people are somewhere they can have a meeting and this has a dramatic impact on the way people work and on the productivity of an organisation and being able to move things forward and not be limited by where you physically happen to be. Very powerful technology, this idea of electronic meetings.
Now, the Internet needs to become more intelligent. Today it is basically random Web pages, billions of them, and if you take those Web pages and flip it over and look on the back of the Web page, in effect you would see tags, tags which describe what the page looks like, tags that describe formatting information, helvetica, centred, bold, blue, and with the introduction of XML, vitally important technology to the next generation of the Internet, XML now allows for Web pages to have context, so you flip over the back of the Web page and you see things which say postal code, customer number, delivery route, quantity, amount owed, business terms, that now allow Web pages to talk to each other without a client being involved, between server and server performing integration, applications, enabling e-marketplaces to function, allowing auctions and bidding to take place without the involvement of a client server model of the past.
And so, this evolution of the Web using XML is vitally important and the establishment of common vocabularies across industries is essential to the continued growth of the Internet.
Now, there are many dimensions to this intelligence. It will be manifested through these various forms of portals, portals like, for example, Yahoo and others around the world that are general purpose in nature, but, more importantly, for portals such as E-chemicals which are very specialised, vertical portals. Some people wake up in the morning and rub their eyes and they go ‘Ah! Chemistry’. They don’t go to the newspaper to see what’s going on, they go to E-chemicals, because they want to talk chemistry, they want to make deals on chemicals, they want to chat and discuss, and these electronic marketplaces increasingly will be where commerce will flow and, of course, this will integrate with the physical fulfilment that all of you are so involved in.
Lifestyle destinations become critical here. Lifestyle destinations are where people hang out on the Internet. Recently I’ve learnt a new technical term in fact called ‘hanging out’. Do you know this term? I’m not sure how it translates in all languages, but it’s a teenager thing. Teenagers, they go out late at night, after you’re ready to go to bed, they’re ready to go out and you say to them :
‘Where are you going?’
and they say
‘Nowhere’
and you say
‘Well what are you going to do?’
and they say
‘Nothing’
and then they come back, later, much later and you say to them
‘Where have you been?’
and they say
‘Nowhere’
so you say
‘Well, what were you doing?’
‘Nothing’
‘Well, you had to be doing something’
‘No, I was just hanging out with my friends, just hanging out.’
And, this is what people do on the Internet, they hang out. Six to ten year olds hang out at Blackberry Creek and eighteen to thirty year olds hang out at Tripod and thirty to forty-five year olds hang out at I-village and forty-five to one hundred and two year old people hang out at Third Age Media and at Third Age Media, if you look in the lower right you will see a changing banner and if you get interested in trading of stocks you see E-trade, if you get interested in a computer you see IBM. So, why is it E-trade and IBM? Why isn’t it Charles Schlob and Gateway? Well, it’s because E-trade and IBM made a deal with Third Age Media and the deal is non-exclusive but preferential, where we provide a marketing relationship, where we have a content relationship with this particular segment of people, because we care where these people are hanging out and we want to bring them back to our site. So, if companies have a strategy of building this great portal and everyone’s going to come, I think there’s a great flaw there. Much more important is to find out where your constituencies hang out. So, if I go to Third Age and if I get interested in postage, what do I find? who is the marketing relationship that I might find there? and, of course, there are many competing possibilities and frankly I don’t see any relationships with postal issues at Third Age or any of these other sites as well, so it is important to find out where do the constituencies that you care about, where are they hanging out, and create marketing linkages with them.
Now, the next generation of the Internet needs to become easier and there’s nothing easy about it today. It needs to become greatly simplified and we’re working hard on this to introduce a way for Web page developers to be able to introduce functionality into those Web pages so that they can do something without having to be a programmer. This is a very significant effort. Also, in the area of Lennox and open source software, I can tell you there is something quite dramatic happening and there isn’t time to go into this in detail, but, I will just say to you that with regard to Lennox, that over my short thirty-four years at IBM, I’ve seen three major shifts occur in information technology. The first was the PC in 1981. The second was the Internet in 1991. The third was Lennox in 1999. In all three cases there were some similarities. Number one, venture capital flowed into these new areas. Number two, people left their jobs at universities and companies and flowed into, moved into those areas. Number three was a grass roots initiative, in all three cases was not a tops down initiative, it was also quite standard spaced and number five, most important, existing companies in our industry all said ‘Who needs it?’ In 1981 companies said ‘I can’t imagine why anyone would want a computer in their home’ and companies like ours and others said ‘Why would anyone want to do anything serious with a personal computer, it’s a toy?’ In 1991 people said ‘The Internet. Are you kidding? That’s something for research or students. There’s not going to be any serious business done on the Internet.’ Then, in 1999 when Lennox reared its head, a lot of companies said ‘Who needs it?’ Sun Microsystems said ‘Who needs Lennox, we have Solaris?’ Microsoft said ‘Lennox, are you kidding, who needs Lennox, we have Windows?’ and then you heard IBM saying ‘We all need Lennox’. So, you see, this shows you that only the deepest of sinners know how to repent.
We have seen this movie before. This is a dramatic change happening in information technology that will transform the way we think about information technology and it will greatly simplify the implementation of the infrastructure necessary to scale and to achieve the transfer of skills from universities that are necessary to proceed.
Now, the last of the seven characteristics is trust. This is not an issue of security. Although the Internet is completely insecure as a communications mechanism, it is possible to do things completely securely by using encryption. That’s not what I’m talking about here. Security, the only issue is policy, it is not a technology issue, it is an issue of audit and management and procedural steps. The issue I’m talking about here is authentication and authentication is something that we don’t have ubiquitously on the Web. We have a sort of flaky log in and password that flows over the Internet in the clear for the most part. This is an unacceptable way to build e-business in the future. We must have digital ID’s. We must have leadership among all of us in the private sector to exploit the possibilities of having a digital ID. Many people today fear digital ID’s. They think it is something coming from a Government which means that the Government will be able to read my e-mail or see my every mouse-click. This is not the case at all. Digital ID’s will be of multiple source, just like we have multiple sources in our wallets today, we will have multiple sources of ID’s in the digital form and these will empower us, these will allow us to have authentication to establish that we are who we say we are. Following that we can have authorisation and then confidentiality and then integrity and, most importantly, non-repudiation which means that our transactions can stand up in a court of law and so we must move forward rapidly with digital ID’s. We now have in the major geographies of the world a legal framework that permits it and all that stands in the way of exploiting it is leadership on the part of all of us and I urge all of you who are not intimately familiar with public key infrastructure to learn more about it. It will enable us to implement P3P, the platform for privacy preferences, where some people may choose to anonymous and other people will choose to tell their life story in return for a discount. A lot of flexibility will be possible. Frankly, I look forward to the day when I can get my medical records off the Internet, where I know at last that they will be safe and that I will have control over my medical records, not some manila folder that sits in an office somewhere, where I have no idea who has access to them.
Open standards continue to become the major thing to allow the Internet to evolve. The Internet works exactly the same everywhere and now we need to build on that basic standard and create vocabularies, industry by industry, built on XML, that allow for trading partner agreements, that allow for contracts to be exchanged using common vocabularies. Public policy will be vitally important and it is quite important that Government leaders of the world recognise that the Internet is a force of good, that it can enhance health, can enhance education, can enhance the productivity of nations and the competitiveness of nations. Regulation is not required and, in fact, regulating the Internet would be quite similar to regulating the wind. It’s not going to happen.
So, the next generation of the Internet is unfolding. Each day we get a step closer. Today’s Web is nothing like it was five years ago, but, when did it change is hard to say, it just evolved as we went along. It will enable millions of e-businesses and these e-businesses that we see, ranging from tiny ones to major ones, will become a part of our life, but frankly we’re at the very beginning and we should expect to see more failures and, when we pick up the papers and we read about a company in the UK, Boo.com, that went bankrupt, we should not be alarmed. I was alarmed when I read in a New York financial newspaper, ‘Boo.com goes bankrupt, maybe the Internet is in trouble’. I can assure you that it had nothing to do with the Internet. We should expect to see more failures because it is so easy to start a business on the Internet. There are thousands of bankruptcies every week around the world and there will continue to be so having nothing to do with the Internet, but having to do with a failure to properly segment a market, set the right prices, properly manage costs and, most importantly, to deliver the world class customer service that people expect.
Expectations are rising by the day and my final topic is to comment on this subject of the power of a click.
People know what’s possible today on the Internet and increasingly they expect it and increasingly they’re not finding it. We have a lot of work to do together across all industries to begin to come even close to meeting the expectations of people. Recently I went to a Web site to find out if there was a coupon available for a free stay in a hotel and I found this coupon, specific to me I was able to see how many points I have accrued, I could see a coupon that would give me a free night’s stay, so I called the hotel and said
‘Would you have a room next Friday night in New York City’
They said, ‘Yes we do’
I said ‘Great, I’ll take it’
‘Anything else we can do for you Mr Patrick?’
I said ‘Yes, I’d like to pay for that room with this coupon I’m looking at here on the Internet’.
And the person said ‘I don’t know what you’re talking about’.
And I said ‘Well, I have this coupon I’m looking at here. In my account. Coupon XYZ’.
And the woman said ‘I don’t have any access to that. This is the reservations department’.
I said ‘Well, how do I use this coupon to pay for this room?’
She said ‘It’s no problem at all Mr Patrick. Just call us back Monday morning, 9am to 5pm, Monday to Friday during our business hours and give us your credit card number and for just $35 we will overnight you a copy of that coupon you’re looking at’.
Now, in our country we call that a stick in the eye. I don’t know what you call it in your particular language. Now this company is not stupid, the problem is application and integration. This is the Holy Grail of e-business. It is enabling incompatible applications to talk to each other and the classical answer that the CIO would give to the CEO is ‘No problem, we’re re-engineering our reservations system and our new reservations system is going to incorporate the frequent stayer points system’ and the CEO says ‘That’s great. When’s it going to be ready?’ The CIO says ‘Eighteen months’ and the CEO says ‘Well that’s great but, we have competition, we can’t wait eighteen months’. This is where we introduce something called Message Queuing which is a critical vital technology to the next generation of the Internet that allows incompatible applications to send messages to each other without being re-engineered. This is incredibly important for the work that all of you are doing to be able to integrate the fulfilment aspect of the world with the financial and e-commerce aspect of the world. Message Queuing is the shortcut, it is the quick path way to enable applications to talk to each other. Now, these expectations are expanding so rapidly and yet they’re not being met. Look at this. This is a software company where I went to buy something and I clicked here to buy and it said ‘no problem, step one, print this form – step two, fill it out and fax it to us’. This is not e-business folks. Now, look at this e-mail. This is a real e-mail – I have slightly camouflaged it to protect the guilty – from a large financial services company. I was here in Europe a few months ago on business and I realised that there was an administrative matter that I had to take care of with my financial services company that was not a buy or sell order of securities, it was a very simple administrative matter and so I realised that I had to do this. It was very late at night and in fact, it was so late at night that the institution was closed and so I sent them an e-mail and said please do this for me, and, here’s their answer:
‘Dear Mr Patrick, thanks for your e-mail, we can’t do that by e-mail, you have to talk to us 9am to 5pm Monday to Friday during our normal business hours. Call us on our 800 number’ (which of course you can’t call from Europe) ‘but, if you have any other questions then just send us an e-mail.’
Now, this shows you how far we have to go and I believe in the world of physical fulfilment, we certainly are going to see rising expectations. People will expect to be able to receive delivery on Saturday, on Sunday. People have time to do things on Saturday and Sunday and they will find what they need on Saturday or Sunday and they will expect to find local fulfilment and if they can’t get it from the postal service, they will find they may be able to get it at the Shell gasoline station or at the 7-11 Store and there are going to be many intermediaries that are going to step in to make local fulfilment possible. So I urge you, and I know many of you are thinking about partnerships of various kinds to be able to deliver when people expect. They will not accept the fact that they have a global network that’s available 24 by 7, but yet the physical, the most important aspect of the transaction is not possible in some cases until forty-eight hours later.
So, the bottom line here is accommodation and it is whether organisations are going to accommodate the Internet while they continue to embrace their old ways of doing business or are they going to embrace the Internet as their primary relationship mechanism for all constituencies while they accommodate their old ways of doing business and I suggest to you that most organisations have not yet made that decision as to which of those approaches they will take.
So, in summary, the advice that I offer based on my travels is very simple. Number one, think outside in. Outside is where all the people are and they have the power, walk in their shoes. If you think inside out you’re doomed. Think big but start simple and grow fast. The old model of plan, build, deliver – eighteen month cycle – has been replaced by the Internet model which is sense and respond – eighteen day cycle – and that’s the way we have to think. Now, I’m not suggesting to be reckless and to throw something up against the wall. I’m suggesting to build on a framework that provides scaleability. The biggest challenge that most Internet companies have today is success. If they succeed, they will fail, because they can not scale to anywhere near the magnitude that is necessary to respond to the opportunity. Remember, we’re only 1% of the way into this. And, lastly, get a taste of Internet culture. I recommend any new Web initiative be approved by a sixteen year old before it is launched and if you can’t find a sixteen year old to talk to, talk to these people. They’re not sixteen as you can see, but they totally understand the technology. They are not intimidated by technology contrary to popular belief. They understand it, they embrace it, they’re part of it.
And so, in summary, I invite you to visit IBM.com/Patrick where you can find all that I have discussed with you this morning, including some short papers about Internet security, about the expectations of people, about how people will expect end to end fulfilment, not just receiving a package, by the way I meant to mention that, today you can buy a little cell phone like this, it weighs maybe 50g and when you receive it, you can click here to buy and it takes minutes to buy it and then you get this box that comes to your home and the box is this big, and it is full of these packaging materials, these little white things, I call them worms, some people call them peanuts, and you unpack your box and you have these peanuts all over the place, they stick to your clothes, they’re all over the floor, you take them out in the trash and the wind blows them across your lawn. Who’s thinking about end to end satisfaction of consumers? Who’s thinking about packaging materials that self-destruct after you open the package? This is a critical issue I think in the fulfilment area because people have to recycle and they end up using all the time they saved in buying something on the Web in dealing with the packaging materials. So, I challenge all of us to think about self-destructing packaging materials.
Lastly, please visit IBM.com/NGI where you can see many more examples of what I’ve been talking about and you can dive quite deep.
Thank you very much for your attention. Pleasure to be with you.
From a big picture point of view, we’re at the very beginning. The number of people actually doing something on the Internet right this very second, as a percentage of the world’s population, rounds off to zero. There’s nobody connected. We are at the very beginning. Now, if you select a demographic, where you believe there is a very high percentage of people utilizing the Internet, but then look at what they are actually doing on the Internet as a percentage of what they could do or would like to do on the Internet, you again will find that it rounds off to zero. We’re at the very beginning. Every day we read more about the digital economy, about these e-marketplaces and we are rapidly transforming from economies to e-conomies. Many of the CEO’s I talk to say ‘John, I have had e-nough hearing about this’, but, it will not go away because we are at the very beginning. Open systems are changing information technology dramatically and, lastly, as part of the big picture, the power of a click and I think in many ways this is the most important aspect of the future of the Internet, in particular in thinking about the issues that all of you are concerned about. I’m not talking here about anarchy, I’m not talking about people marching in the streets, I’m talking about the power of an individual with a mouse button or a cell phone button in their hand and the economic statement that they make when they click, and many institutions are in denial about this transfer of power from institutions to people, but make no mistake, it has happened and it has changed the world forever and we need to listen very carefully to this transfer of power because in it lies the secret to success.
Now the next generation of the Internet is well under construction and is about to make today’s Internet appear primitive. Of course it is somewhat about speed, but, it is also about six other characteristics and I would like to briefly touch on these aspects of the next generation of the Internet which is unfolding right this very moment.
Let’s start with speed. Everyone would like to see more speed and here I stand saying we will be awash in bandwidth. That’s a fairly bold statement, in particular, given that in my hotel room last night here in Geneva, the best I could achieve was 7,200 bits per second, and I was relieved to get that in order to get my e-mail, and so when I say awash in bandwidth you may think I’m crazy, but the fact is that the competition between DSL and cable modems and broad band wireless is having a dramatic impact in those markets where they all exist, and more and more markets are now opening themselves up to these various alternatives and what we see happening is in effect, Adam Smith’s invisible hand at work on bandwidth. Make no mistake, this bandwidth will come and it is coming rapidly and the largest mistake we could make would be to assume that people will not have speed and, in fact, this speed will have dramatic impact, first on video, here’s video today, this is video on the Internet as you might see it today…(video clip). I’m now going to show you that exact same video content on the next generation of the Internet backbone which we currently have operating, same content…(video clip). Look like television? You bet!
Now, what does it mean to have high quality, jitter free, full screen video over the Internet? Well, it has many implications. First and foremost is the introduction of geo-independence where experts, you know what experts are, they’re people who live on aeroplanes, experts now will live on video walls, professors will deliver lectures across continents, doctors will collaborate on surgical procedures and we will have dramatic impact in medicine and education and, of course, in customer service as a result of this video move to the Internet. Now, people are going to expect a much higher level of content. We already have millions of people with high-speed access, expanding rapidly and those people who have it will expect something different than those who don’t have it and so this makes it incumbent upon all of us, as providers of content in various ways to make sure that our content is creative and captivating. Let me show you an example of some content that I’ve found recently that I think is very creative…(video clip). So how’s that for a Web page. Now, there are many implications to the speed. The bottle necks are going to shift away from the last mile, back to the server, the specialised computers that deliver the content. Organisations are going to need very large, very powerful, scalable servers and at IBM we like this part of the problem. The content will be closer than you think. While content bottlenecks will move back to the server at the same time, the content will be much more highly distributed out to the edges of the network and we will begin to see the content in fact broadcasted from satellites and distributed from Internet service providers out to set pop servers and out to very specialised devices perhaps on telephone poles in our neighbourhoods and round the world, highly distributing the content the result of which is a very fast, very responsive Internet.
Now, secondly, the Internet will be always on. Today it is not always on, today we have to dial and connect to the Internet and this is a laborious process that goes something like this…(noise of connecting to Internet). You know, some of you actually enjoy hearing that sound. It is music to your ears to get connected and when you get connected and you’re ready to do something…(error sound), Oh, now you’re not connected anymore and you have to start over again and so this is the world we live in today and it is soon going to be replaced by DSL and cable modems and wireless, enabling us to be just always on. Now, when you’re always on instead of having to log on, your propensity to do something changes dramatically. Your propensity to print a postage stamp or to go and learn something or to be entertained or buy something is quite different than when you had to log on. Also, we will begin to think of the Internet as a capability to deliver things other than the Web. Most people today think of the Web and the Internet as one and the same thing. The reality is that the Internet is the underlying communications mechanism and the Web is just one application for delivering content, there are many other possibilities, such as this weather box for example which delivers real-time streaming data coming from the roof of a house of a colleague of mine on the Isle of Wight off of the coast of England – a hundred dollars worth of Radio shack equipment delivering real-time data, distributed through the Web through a published and subscribed model enabling us to find the weather at any point in time from anywhere on this person’s home. You could imagine also connecting over the Internet to the pacemaker of a loved one to monitor a condition and we will soon begin to see many real-time data acquisition examples of the use of the Internet. For example, you may be riding to work on the train and realise that the blinds in your home were left up and you meant to close them. You go to your cell phone, you check the status of the blinds, you connect to your home which, of course, is always on. When you connect to your home, you select the down setting for your blinds, push the button on your phone and down go the blinds.
So, this is just the beginning of the many capabilities that will be possible when we begin to think of the Internet as always on.
Now, number three, the Internet will be everywhere. Today the Internet is not everywhere, today the Internet is where our PC is. Where is the Internet? It is wherever your PC is. Well, that’s going to change dramatically. Perhaps the biggest change that we can see with the Internet over the next couple of years. Today, 95% of Web pages are delivered through a browser on a PC. For example, the weather underground as you see it here on a PC, 95% of Web pages are delivered this way. That 95% is about to drop to 40%, not because of a decline in PC’s, the PC will continue to grow, but the era of the PC as the centre of innovation for the Internet is over and it is over because of the birth of many other kinds of devices, of course, the TV which for many people will be a TV, but some percentage of the time it actually will be their browser to see that Web page. Other people will prefer to use the pager and other people still will prefer to use the digital assistant. This little hand-held computer for many people will be their only computer, their only computer, not for me and perhaps not for many of you, but, for millions of people this will be not only their browser but their only computer.
Then, of course, there’s the phone. The phone is having a dramatic impact on the Internet. In Japan in the month of May, Japan became the first country where more than 50% of all Internet accesses to the Web were made from a telephone and what is going on with Docamo is the tip of the iceberg and when you see teenagers sending pictures of each other over the Internet using their I-mode phone, you know that there’s been some dramatic change. Here in Europe, of course, there’s been some discussion about utilising the phone in some ways as a replacement for the smart card, containing a digital certificate and enabling electronic commerce. Handelsbanken in Sweden for example, is now offering mainframe banking applications over the telephone. America is slowly catching up, hoping to have a more ubiquitous standard and moving to bring applications to the phone, as is Asia and Europe.
Other people will use the kiosk. The kiosk is an important access point to the Internet for those people who don’t want or can’t afford any device and we see these on street corners. I can foresee them in the jungle on platforms, in schools, in churches, in Government buildings, enabling people to have access to transactions and this is quite important because the cost of the Internet as a communications mechanism is so compelling that all transactions will move to the Internet and the kiosk will become a principle method.
And then, of course, there are many new Internet consumer devices. This is an Internet …………… radio. When you plug the Internet into the back of this radio, on the right there you see a tuning knob and on the left is the volume control, enabling you access to five thousand Internet radio stations.
Many devices will come onto the scene, not one device that does everything, but many different devices, because we’re all different. Some of us prefer a PDA that looks like a phone, some prefer a phone that looks like a PDA and we will see all combinations of these just as we see in other consumer devices. The difference being that they will all be offering persistent connections to the Internet.
Now, some people will use all these devices, depending upon who they are and where they are and what they’re doing. Now the phone becomes very ………… to the Internet through applications. At IBM we’re experimenting with several things like this. This is called Blue Pages. It is a directory of all employees at our company and I’m going to type in a few characters of a person’s name, I select it, it sends a request to Blue Pages which is an L-dap directory of all employees at IBM, it shows me the choice here to call this person, or I can send an instant message and I’m going to take that choice. Now I have a menu of what kind of an instant message I want to send – call me now, call me in five minutes, help I’ve fallen and can’t get up, or other messages. I’m going to take the simple message, call me in five minutes and that message will now be sent to my desktop. It arrives at the desktop and now that person receiving the message can reply to that message and the message will return back to the phone. This is a very important integration now, enabling the phone to bring the Internet to where you are, so, no longer will the Internet be where your PC is, the Internet will be where you are.
Now, instant messaging is a key part of this next factor which I call natural and in fact I think instant messaging is the next really big thing. You may think of instant messaging today as something used by teenagers and in fact it is used by tens of millions of teenagers, they get home from school, they make a b-line for the PC not to use a Web browser and search the Web, that’s old fashioned stuff, they go to ICQ or AOL Instant Messager so that they can chat with their buddies that they just got off of the bus with. But, that’s not what I’m talking about here. I’m talking about business use of instant messaging. It’s not just chat. It’s the ability to establish presence, to know who is on-line and have access to that person on an instant basis, to be able to create a back channel of communications. We have 240,000 users of this at our company and I can tell you, if we turned it off, we would have mutiny. It has become so fundamental to our ability to communicate, in particular as we all travel more, because the Internet allows us to travel more, we can be where we need to be with clients or at conferences such as this, but still have the need to be able to communicate. So you’re attached to a single phone line in an hotel at a very slow rate and yet, through instant messaging, your assistant or colleagues can reach you and a message pops up on your screen and you can answer them. This is a very powerful way to amplify and make more productive the way we work together. I’m going to show you an example here. I selected Frank Schleptenburg and I’m going to send Frank a message. ‘Frank, how’s the weather in Heidleburg?’ and I’m going to send this message to Frank…(sounds of the message spoken in German). Now, I typed that message in English, unfortunately, the only language that I know and it was translated on the fly to German, it was then played using a text to speech technology, it was played to Frank, Frank answers me in German ‘John, it is cold and rainy’, Frank says it is always cold and rainy in Heidelburg. Now, think about what we have here. When you combine instant messaging with voice recognition, with machine translation, with text to speech and you get a real-time multi-lingual intercom. Think about a person asking a question of customer service in Spanish and having that question be routed to the most knowledgeable person on that particular question, who answers it in Mandarin and the questioner hears the answer in Spanish. This is a game-changer in the form of customer service. At the bottom of the buddy list here you will see a series of what we call bots. A bot is a robot, a software robot that can perform various functions, such as, for example, Blue Pages. I might say ‘Who is Michael Nelson?’ and I send that message to Blue Pages which is not a person, but rather is a bot and that bot returns the information about this particular person. You can envision many applications with these simple bots to look up a stock quote, to look up the definition of something, like for example, I might say ‘What is NGI?’. ‘Next generation of the Internet’, click here to learn more. So this concept of utilising simple applications like the instant messaging application, as a communications centre, I believe is an evolving and important area of the Internet. It doesn’t require a browser. Browsers will recede to what they started as, which is something very useful for browsing text, but for simple applications such as bringing up something to print a stamp for example, does not really require a browser and, in fact, the stand alone desktop integrated application would be a very much more highly productive and simple way, rather than to interrupt your browsing that may be going on.
Now, the next logical extension of this process is in electronic meeting. Now, what you see happening here is that these two people are having this meeting. These people may be on different continents in a time zone that makes sense to them to have a meeting. Electronic meetings are having a dramatic impact in our company and it can in any company and it is important because it allows you to have a meeting, and I don’t know about you, have you ever had the case when you need to meet with someone but they’re busy?
“The boss, I need to see the boss.”
“Well, the boss is out of town.”
“Well I need to see the person this week, it’s important, I need to review next year’s budget.”
“Well, I’m sorry, he’s not here, he’s out of town.”
Well, that doesn’t happen any more when you have electronic meetings. One thing I’ve discovered is that people are always somewhere and as long as people are somewhere they can have a meeting and this has a dramatic impact on the way people work and on the productivity of an organisation and being able to move things forward and not be limited by where you physically happen to be. Very powerful technology, this idea of electronic meetings.
Now, the Internet needs to become more intelligent. Today it is basically random Web pages, billions of them, and if you take those Web pages and flip it over and look on the back of the Web page, in effect you would see tags, tags which describe what the page looks like, tags that describe formatting information, helvetica, centred, bold, blue, and with the introduction of XML, vitally important technology to the next generation of the Internet, XML now allows for Web pages to have context, so you flip over the back of the Web page and you see things which say postal code, customer number, delivery route, quantity, amount owed, business terms, that now allow Web pages to talk to each other without a client being involved, between server and server performing integration, applications, enabling e-marketplaces to function, allowing auctions and bidding to take place without the involvement of a client server model of the past.
And so, this evolution of the Web using XML is vitally important and the establishment of common vocabularies across industries is essential to the continued growth of the Internet.
Now, there are many dimensions to this intelligence. It will be manifested through these various forms of portals, portals like, for example, Yahoo and others around the world that are general purpose in nature, but, more importantly, for portals such as E-chemicals which are very specialised, vertical portals. Some people wake up in the morning and rub their eyes and they go ‘Ah! Chemistry’. They don’t go to the newspaper to see what’s going on, they go to E-chemicals, because they want to talk chemistry, they want to make deals on chemicals, they want to chat and discuss, and these electronic marketplaces increasingly will be where commerce will flow and, of course, this will integrate with the physical fulfilment that all of you are so involved in.
Lifestyle destinations become critical here. Lifestyle destinations are where people hang out on the Internet. Recently I’ve learnt a new technical term in fact called ‘hanging out’. Do you know this term? I’m not sure how it translates in all languages, but it’s a teenager thing. Teenagers, they go out late at night, after you’re ready to go to bed, they’re ready to go out and you say to them :
‘Where are you going?’
and they say
‘Nowhere’
and you say
‘Well what are you going to do?’
and they say
‘Nothing’
and then they come back, later, much later and you say to them
‘Where have you been?’
and they say
‘Nowhere’
so you say
‘Well, what were you doing?’
‘Nothing’
‘Well, you had to be doing something’
‘No, I was just hanging out with my friends, just hanging out.’
And, this is what people do on the Internet, they hang out. Six to ten year olds hang out at Blackberry Creek and eighteen to thirty year olds hang out at Tripod and thirty to forty-five year olds hang out at I-village and forty-five to one hundred and two year old people hang out at Third Age Media and at Third Age Media, if you look in the lower right you will see a changing banner and if you get interested in trading of stocks you see E-trade, if you get interested in a computer you see IBM. So, why is it E-trade and IBM? Why isn’t it Charles Schlob and Gateway? Well, it’s because E-trade and IBM made a deal with Third Age Media and the deal is non-exclusive but preferential, where we provide a marketing relationship, where we have a content relationship with this particular segment of people, because we care where these people are hanging out and we want to bring them back to our site. So, if companies have a strategy of building this great portal and everyone’s going to come, I think there’s a great flaw there. Much more important is to find out where your constituencies hang out. So, if I go to Third Age and if I get interested in postage, what do I find? who is the marketing relationship that I might find there? and, of course, there are many competing possibilities and frankly I don’t see any relationships with postal issues at Third Age or any of these other sites as well, so it is important to find out where do the constituencies that you care about, where are they hanging out, and create marketing linkages with them.
Now, the next generation of the Internet needs to become easier and there’s nothing easy about it today. It needs to become greatly simplified and we’re working hard on this to introduce a way for Web page developers to be able to introduce functionality into those Web pages so that they can do something without having to be a programmer. This is a very significant effort. Also, in the area of Lennox and open source software, I can tell you there is something quite dramatic happening and there isn’t time to go into this in detail, but, I will just say to you that with regard to Lennox, that over my short thirty-four years at IBM, I’ve seen three major shifts occur in information technology. The first was the PC in 1981. The second was the Internet in 1991. The third was Lennox in 1999. In all three cases there were some similarities. Number one, venture capital flowed into these new areas. Number two, people left their jobs at universities and companies and flowed into, moved into those areas. Number three was a grass roots initiative, in all three cases was not a tops down initiative, it was also quite standard spaced and number five, most important, existing companies in our industry all said ‘Who needs it?’ In 1981 companies said ‘I can’t imagine why anyone would want a computer in their home’ and companies like ours and others said ‘Why would anyone want to do anything serious with a personal computer, it’s a toy?’ In 1991 people said ‘The Internet. Are you kidding? That’s something for research or students. There’s not going to be any serious business done on the Internet.’ Then, in 1999 when Lennox reared its head, a lot of companies said ‘Who needs it?’ Sun Microsystems said ‘Who needs Lennox, we have Solaris?’ Microsoft said ‘Lennox, are you kidding, who needs Lennox, we have Windows?’ and then you heard IBM saying ‘We all need Lennox’. So, you see, this shows you that only the deepest of sinners know how to repent.
We have seen this movie before. This is a dramatic change happening in information technology that will transform the way we think about information technology and it will greatly simplify the implementation of the infrastructure necessary to scale and to achieve the transfer of skills from universities that are necessary to proceed.
Now, the last of the seven characteristics is trust. This is not an issue of security. Although the Internet is completely insecure as a communications mechanism, it is possible to do things completely securely by using encryption. That’s not what I’m talking about here. Security, the only issue is policy, it is not a technology issue, it is an issue of audit and management and procedural steps. The issue I’m talking about here is authentication and authentication is something that we don’t have ubiquitously on the Web. We have a sort of flaky log in and password that flows over the Internet in the clear for the most part. This is an unacceptable way to build e-business in the future. We must have digital ID’s. We must have leadership among all of us in the private sector to exploit the possibilities of having a digital ID. Many people today fear digital ID’s. They think it is something coming from a Government which means that the Government will be able to read my e-mail or see my every mouse-click. This is not the case at all. Digital ID’s will be of multiple source, just like we have multiple sources in our wallets today, we will have multiple sources of ID’s in the digital form and these will empower us, these will allow us to have authentication to establish that we are who we say we are. Following that we can have authorisation and then confidentiality and then integrity and, most importantly, non-repudiation which means that our transactions can stand up in a court of law and so we must move forward rapidly with digital ID’s. We now have in the major geographies of the world a legal framework that permits it and all that stands in the way of exploiting it is leadership on the part of all of us and I urge all of you who are not intimately familiar with public key infrastructure to learn more about it. It will enable us to implement P3P, the platform for privacy preferences, where some people may choose to anonymous and other people will choose to tell their life story in return for a discount. A lot of flexibility will be possible. Frankly, I look forward to the day when I can get my medical records off the Internet, where I know at last that they will be safe and that I will have control over my medical records, not some manila folder that sits in an office somewhere, where I have no idea who has access to them.
Open standards continue to become the major thing to allow the Internet to evolve. The Internet works exactly the same everywhere and now we need to build on that basic standard and create vocabularies, industry by industry, built on XML, that allow for trading partner agreements, that allow for contracts to be exchanged using common vocabularies. Public policy will be vitally important and it is quite important that Government leaders of the world recognise that the Internet is a force of good, that it can enhance health, can enhance education, can enhance the productivity of nations and the competitiveness of nations. Regulation is not required and, in fact, regulating the Internet would be quite similar to regulating the wind. It’s not going to happen.
So, the next generation of the Internet is unfolding. Each day we get a step closer. Today’s Web is nothing like it was five years ago, but, when did it change is hard to say, it just evolved as we went along. It will enable millions of e-businesses and these e-businesses that we see, ranging from tiny ones to major ones, will become a part of our life, but frankly we’re at the very beginning and we should expect to see more failures and, when we pick up the papers and we read about a company in the UK, Boo.com, that went bankrupt, we should not be alarmed. I was alarmed when I read in a New York financial newspaper, ‘Boo.com goes bankrupt, maybe the Internet is in trouble’. I can assure you that it had nothing to do with the Internet. We should expect to see more failures because it is so easy to start a business on the Internet. There are thousands of bankruptcies every week around the world and there will continue to be so having nothing to do with the Internet, but having to do with a failure to properly segment a market, set the right prices, properly manage costs and, most importantly, to deliver the world class customer service that people expect.
Expectations are rising by the day and my final topic is to comment on this subject of the power of a click.
People know what’s possible today on the Internet and increasingly they expect it and increasingly they’re not finding it. We have a lot of work to do together across all industries to begin to come even close to meeting the expectations of people. Recently I went to a Web site to find out if there was a coupon available for a free stay in a hotel and I found this coupon, specific to me I was able to see how many points I have accrued, I could see a coupon that would give me a free night’s stay, so I called the hotel and said
‘Would you have a room next Friday night in New York City’
They said, ‘Yes we do’
I said ‘Great, I’ll take it’
‘Anything else we can do for you Mr Patrick?’
I said ‘Yes, I’d like to pay for that room with this coupon I’m looking at here on the Internet’.
And the person said ‘I don’t know what you’re talking about’.
And I said ‘Well, I have this coupon I’m looking at here. In my account. Coupon XYZ’.
And the woman said ‘I don’t have any access to that. This is the reservations department’.
I said ‘Well, how do I use this coupon to pay for this room?’
She said ‘It’s no problem at all Mr Patrick. Just call us back Monday morning, 9am to 5pm, Monday to Friday during our business hours and give us your credit card number and for just $35 we will overnight you a copy of that coupon you’re looking at’.
Now, in our country we call that a stick in the eye. I don’t know what you call it in your particular language. Now this company is not stupid, the problem is application and integration. This is the Holy Grail of e-business. It is enabling incompatible applications to talk to each other and the classical answer that the CIO would give to the CEO is ‘No problem, we’re re-engineering our reservations system and our new reservations system is going to incorporate the frequent stayer points system’ and the CEO says ‘That’s great. When’s it going to be ready?’ The CIO says ‘Eighteen months’ and the CEO says ‘Well that’s great but, we have competition, we can’t wait eighteen months’. This is where we introduce something called Message Queuing which is a critical vital technology to the next generation of the Internet that allows incompatible applications to send messages to each other without being re-engineered. This is incredibly important for the work that all of you are doing to be able to integrate the fulfilment aspect of the world with the financial and e-commerce aspect of the world. Message Queuing is the shortcut, it is the quick path way to enable applications to talk to each other. Now, these expectations are expanding so rapidly and yet they’re not being met. Look at this. This is a software company where I went to buy something and I clicked here to buy and it said ‘no problem, step one, print this form – step two, fill it out and fax it to us’. This is not e-business folks. Now, look at this e-mail. This is a real e-mail – I have slightly camouflaged it to protect the guilty – from a large financial services company. I was here in Europe a few months ago on business and I realised that there was an administrative matter that I had to take care of with my financial services company that was not a buy or sell order of securities, it was a very simple administrative matter and so I realised that I had to do this. It was very late at night and in fact, it was so late at night that the institution was closed and so I sent them an e-mail and said please do this for me, and, here’s their answer:
‘Dear Mr Patrick, thanks for your e-mail, we can’t do that by e-mail, you have to talk to us 9am to 5pm Monday to Friday during our normal business hours. Call us on our 800 number’ (which of course you can’t call from Europe) ‘but, if you have any other questions then just send us an e-mail.’
Now, this shows you how far we have to go and I believe in the world of physical fulfilment, we certainly are going to see rising expectations. People will expect to be able to receive delivery on Saturday, on Sunday. People have time to do things on Saturday and Sunday and they will find what they need on Saturday or Sunday and they will expect to find local fulfilment and if they can’t get it from the postal service, they will find they may be able to get it at the Shell gasoline station or at the 7-11 Store and there are going to be many intermediaries that are going to step in to make local fulfilment possible. So I urge you, and I know many of you are thinking about partnerships of various kinds to be able to deliver when people expect. They will not accept the fact that they have a global network that’s available 24 by 7, but yet the physical, the most important aspect of the transaction is not possible in some cases until forty-eight hours later.
So, the bottom line here is accommodation and it is whether organisations are going to accommodate the Internet while they continue to embrace their old ways of doing business or are they going to embrace the Internet as their primary relationship mechanism for all constituencies while they accommodate their old ways of doing business and I suggest to you that most organisations have not yet made that decision as to which of those approaches they will take.
So, in summary, the advice that I offer based on my travels is very simple. Number one, think outside in. Outside is where all the people are and they have the power, walk in their shoes. If you think inside out you’re doomed. Think big but start simple and grow fast. The old model of plan, build, deliver – eighteen month cycle – has been replaced by the Internet model which is sense and respond – eighteen day cycle – and that’s the way we have to think. Now, I’m not suggesting to be reckless and to throw something up against the wall. I’m suggesting to build on a framework that provides scaleability. The biggest challenge that most Internet companies have today is success. If they succeed, they will fail, because they can not scale to anywhere near the magnitude that is necessary to respond to the opportunity. Remember, we’re only 1% of the way into this. And, lastly, get a taste of Internet culture. I recommend any new Web initiative be approved by a sixteen year old before it is launched and if you can’t find a sixteen year old to talk to, talk to these people. They’re not sixteen as you can see, but they totally understand the technology. They are not intimidated by technology contrary to popular belief. They understand it, they embrace it, they’re part of it.
And so, in summary, I invite you to visit IBM.com/Patrick where you can find all that I have discussed with you this morning, including some short papers about Internet security, about the expectations of people, about how people will expect end to end fulfilment, not just receiving a package, by the way I meant to mention that, today you can buy a little cell phone like this, it weighs maybe 50g and when you receive it, you can click here to buy and it takes minutes to buy it and then you get this box that comes to your home and the box is this big, and it is full of these packaging materials, these little white things, I call them worms, some people call them peanuts, and you unpack your box and you have these peanuts all over the place, they stick to your clothes, they’re all over the floor, you take them out in the trash and the wind blows them across your lawn. Who’s thinking about end to end satisfaction of consumers? Who’s thinking about packaging materials that self-destruct after you open the package? This is a critical issue I think in the fulfilment area because people have to recycle and they end up using all the time they saved in buying something on the Web in dealing with the packaging materials. So, I challenge all of us to think about self-destructing packaging materials.
Lastly, please visit IBM.com/NGI where you can see many more examples of what I’ve been talking about and you can dive quite deep.
Thank you very much for your attention. Pleasure to be with you.
