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Unleashing e-Business … Defining the Potential

Date: approx. 1998

Internet World – Chicago

ALAN MECKLER: — technology. John Patrick’s got a very interesting presentation today called Unleashing e-Business …Defining the Potential. John’s going to demonstrate how companies and communities are using the Internet to transform the way they do business. And he’s going to discuss the implications associated with the increasing importance of the Web in our daily lives. Let’s bring out John Patrick.

JOHN PATRICK: Thank you very much, Alan. Good afternoon. Nice to be here with you to talk about the Internet. It’s always a pleasure to be at Internet World. Many of you are helping create the future for the Internet, and so it would be a bit presumptuous of me to come here with all the answers. And I certainly don’t pretend to do that. But I hope that one fellow traveler will have some ideas and plant a few seeds that will be useful.

I’d like to discuss the transformation to an electronic business. What’s that all about. What’s this notion of e-business (http://www.ibm.com/e-business). Talk about some of the technologies and issues that are on the horizon that will have significant impact, I believe, on what e-business is all about. And lastly, to take a brief look at what will it be like when we’re all connected in the universally connected world.

I’d like to start by discussing three meta trends that I think are really shaping the future, that are happening at a breakneck speed right under our nose, changing everything forever about our business and our personal lives. And it starts with the natural evolution of the new medium.

Some may still think of the Internet as a network, as interconnected telephone circuits and routers and various forms of technical jargon. Things with the roots and the educational and research community. And of course, all of that is true. But from a business perspective, in terms of thinking about the impact on us in the future, all of us, I think we better think of it as the new medium. Much as radio evolved from AM to FM to FM stereo. And TV evolved from black-and-white to color to color surround sound, theater sound, much in the same way the Internet is evolving as a very rich, new medium that will facilitate natural human interaction.

It’s quite profound, actually, when you think of this new medium with very large numbers of people connected. How many? Well, nobody knows. Any figure about how many people are connected or are going to be connected is certainly suspect. But I know for sure that it’s very big and it’s growing rapidly. And for sure at some point it’s going to be a billion. Maybe not too far from now.

Now, how will these people be connected? Will they all — will there be a billion people with personal computers? Oh, if it could be so. No, I think they’ll be connected in a lot of different ways. Well, will it be the personal computer or the network computer? Answer: yes. And also the personal digital assistant. And your car and your phone and your pager and appliances and lots of other things that we perhaps can’t even yet imagine.

People connected in many different ways. Some people in front of their PC. And most of the time it’s a PC, but five percent of the time it’s a television. And other people in front of their TV. And 95 percent of the time it’s a PC, but five percent of the time it’s a television. The large numbers of people connected — perhaps the largest number connected through kiosks, kiosks in churches and schools and government buildings. On street corners. On the plant floor. People taking a Web break instead of a smoke break. Kiosks at the airport where you can swipe your credit card and send an e-mail home or send a flower or check out the stock market. Huge numbers of people connected.

Also soon we’ll be thinking about this pipe connected to our home or to our agency or our department. And through this pipe will flow packets. Little packets of say, a couple of thousand zeros and ones on average. And these packets make up parts of e-mails, faxes, Web pages as we know them. Telephone conversations. Radio and television programming. Digital interactive video broadcasts and other forms of media. Packets flowing through a pipe that’s made of, in some cases, copper wire. Some will have a glass pipe, fiber. Some will have a pipe made of air. And the beautiful thing about these little packets is they don’t care what they’re flowing through.

Now, the second meta trend that’s very important to all of this is that the network is putting people on charge. The individual. I don’t use the term consumer because that implies someone just buying toothpaste or someone sitting at home. The individual may be a person on the college campus. It may be a purchasing agent in your company or mine. People. Power to the people.

The Internet, this new medium, is not about power to IBM or AT&T or Microsoft or any other large company. It’s about power to the people. People forever will now be in charge. If you want to go hear Elton John sing Candle in the Wind again right now, you do. If you want to go see what the temperature of a solar panel on the Pathfinder mission is right now, you do. If you want to open an account at a bank or establish a new insurance policy at three o’clock in the morning, you do. Because you’re in charge.

Can you imagine going to a Web page and it says, welcome to our business. Our hours are nine to five Monday to Friday. Believe it or not, I got an e-mail just today from some spammer offering something I won’t repeat. and it said, call our 800 number Monday to Friday, nine to five. That is hardly power to the people. People will decide the hours of business. People will decide their curriculum for education based on their schedule, not on the course catalogue. People will have incredible power. And businesses and organizations and governments who see this power to the people will be very clever. Will take advantage of that. And will offer services and support for those people. And as a result will enhance their own capabilities, their own power, in a sense, as a result of the power to the people.

Now the third meta trend, Web-centric marketing. This is a juxtaposition going on between what we see in many instances today. Core information technology systems, of course, contain all the data and the applications in many companies. And then over here is the Web server. And in many instances what’s going on is a set of activities over here on the information technology side working its way out to the Web. Another approach is to say, why don’t we start over here. That’s where all the people are. On the Web. And work our way back into these core systems. So Webcentricity to our business thinking, in other words.

Now, there are many issues, questions, imponderables, that come out of this universally connected world. Some of them have no answers. How will people find you. How will you project your unique strength. What will be your advantages. Why will people trust you. Trust is going to be incredibly important. I’ve heard some people say, you know, brands and logos aren’t going to mean much. Turn of the century there’s going to be a billion Web pages. Brands mean nothing. And I say brands mean everything. Because that’s one of the indicators that tells you who to trust.

Now, with regard to what’s going on out there, I think there’s another important dimension. Recently I spoke with a group of paper executives. And the night before I went out to the Web to see what I could learn about the paper industry. And I came upon this Web page, Steve Shook’s Directory of Forest Products, Wood Science and Marketing (forestdirectory.com). I used my little dogpile search engine (dogpile.com) and I found a lot of pages about paper, but this one jumped out at me. 168,000 people had been to this page. It contains everything imaginable about paper. What are the issues. What are the technologies. Who are the builders. Who are the users. What are some points of view about what’s going on in this industry. I thought I had discovered the god of paper.

And I said to this group, excuse me, raise your hand. Anybody know Steve Shook? Not a hand went up. And one person said well, who is this person? I said, I think he’s a student. A student? Why is he doing this? Beats me. He likes paper. He’s a student at the University of Washington in the Pacific Northwest. Lots of trees out there. Maybe his family was in the business. I don’t know. But I’d get to know Steve Shook. You know, this could be International Paper or Boise Cascade or Georgia Pacific and Steve Shuck bringing you the Directory of Forest Products, Wood Science and Marketing.

Well, how do we know this information is right? You don’t. How do you know anything is right. You talk to people. You read it. You test the veracity. Now, what’s the point here? Every industry has a Steve Shuck. You can pick any industry and there’s somebody out there who is the mecca for banking, for movies. For any subject you can imagine. And the point is to be externally focused and find out who these people are. And talk to them. Support their Website. Work with them. Collaborate with them.

You know, every company has their skeletons, or at least one skeleton in the closet. That issue that they thought was behind them that nobody talks about anymore. But guess what. On the Internet, on the new medium, they’re talking about it. So it’s a good place to spend a lot of time. I recommend get a college student who’s job it is to spend a couple of days a week out there on the Web looking to see what people are saying about your business, about your competitors, about the technology that’s important to your future. About the key universities doing work that impacts your future. And get connected with them.

Well, what’s this e-business term all about anyway? Is this IBM’s name for e-commerce? An answer is no. e-business is a broader thought. It’s a larger thought about becoming an electronic business. e-commerce is, click here to buy a bottle of salsa. e-business is, click here to initiate the supply chain. Click here to start just-in-time inventory flow from company A to company B. Click here to start the on-boarding process for a new employee. Click here to create a virtual conference room to allow multiple small companies to get together and have the power of a very large company. Making all transactions that are possible with an institution or a company be electronic ones. Not just, click here to buy, but click here to be interacting with this e-business.

I think of it across three axes: content, commerce and collaboration. Of course, all applications have a mix of these three. But I find it a useful way to parse the activity and talk about some of the key issues and look at what some people are doing that might provide some ideas.

Now, with regard to content there are many, many, many issues. I think the most important single issue has to do with expectations. Expectations. What do I mean by that? Well, recently my wife and I were visiting our granddaughter. And my wife was taking pictures until the film was full. She said ‘John, please take this down the street to Jack’s One Hour Photo.’

Well, I have to confess, I’m sort of a digital person. I didn’t even know there was a one-hour photo capability. I don’t know a lot about these analog things. But I took the film. I drove down the street. I dropped off the film to Jack. An hour later I went back. Picked up an envelope, and these beautiful prints. And everybody looked. And ooh ahh, look at the baby. It was great. One hour. It exceeded my expectations, I’ll have to tell you that.

Now, I contrast that with last summer when the Pathfinder went to Mars. Now, I’m a great fan of NASA. I think they are wonderful people and have accomplished just amazing things. I just think they’re terrific. And I couldn’t wait to see what was going on with this project. And the Pathfinder landed on Mars. By the way, with an IBM RX-6000 aboard. Just a little side comment there. And out of the Pathfinder drove this little guy, the Sojourner. Isn’t this cool? And I’m watching this activity on the Net. It was a Saturday. And I clicked the button to develop the picture of the Sojourner. I couldn’t wait to see my first glimpse of the Sojourner over the Internet.

And then I waited. And I waited. And I waited. I waited 45 seconds to get that picture from 219 million miles away!! And it didn’t meet — it did not meet my expectations. People expect a lot of the Internet today. Now, some of that has to do with the Internet itself. And I’m going to talk about that in a few minutes. But a lot of it has to do with what you and I do in terms of producing content for the Web. How many times have you been to a Website and you click here to buy and then it says, thank you for your interest. Please print out this form and fax it to us. Click here to buy and it says, well if you’re concerned about your credit card number just call our 800 number. People don’t expect that.

And every day the expectations are going up. Kids know what to expect, don’t they. They grew up on Nintendo. Do you think they’re going to have different expectations? And are they going to be real consumers pretty soon? Every college campus is wired. Broadband for that matter. They don’t know that band width isn’t that great in some places. It’s terrific at universities. And tens of thousands of kids are coming out of school this month. They’re out there now in the economy. They have high expectations. Ask a 16 or 17-year-old, excuse me, could you tell me, what is an insurance agent? Insurance agent — uhm, it must be a Java applet that has something to do with insurance, I guess. So expectations is a very big deal.

Now, the second issue about content has to do with our culture. Now, this is an important issue, and one that we should all be concerned about. Some people aren’t so sure about the Internet. I travel around the world and talk to various government leaders and key influencers about the Internet in my role as the chairman of the Global Internet Project (witsa.org/gip). And I can tell you that some people aren’t so sure the Internet is all such a good thing.

Some people wonder, well what about — what is the impact on our culture? Are the 700 million artifacts in American museums going to disappear and just all become digital and we don’t need any more museums? The 30,000 dialects that we used to have, now there’s 5,000 dialects. Will there soon be just one? French? Or English? No, I don’t think so. Quite to the contrary, in fact, I believe there’s a tremendous opportunity in front of us all here to extend cultures, to share cultures in much more significant ways. To allow any of us to go to the Vatican Library and see the works of Aristotle and Ptolemy. To read letters from King Henry VIII to Ann Boleyn. No longer do you have to be a special scholar, one of maybe a thousand per year who can get in and be able to read that information.

Now we can all go the Chinese National Library and see pictures of the Luhan. 16.8 million documents in the great library. Not all yet digitized. But most people in the world will never get to Beijing. But on the Web they will. And with data-hiding technology, to be able to embed information about the authenticity of these great works in the actual image, or, for that matter, sound and video, will be able to protect this authenticity and be able to share cultures in a greater way and perhaps, in fact, these nearly extinct dialects may start to come back.

Because after all, the reason many of them disappeared was because the people, in a sense, disappeared. They went to school together in a little tiny town. They went away to get their education. They went off to get a job and they never came back together physically. But now they can come back just like your kids and mine, if they’re teenagers, do today. They don’t part their ways. They just change IP addresses.

Now, another thing about content that I think is quite important in the nature of the content from a digital point of view. If you go to a Web page today and you see black-and-white courier, black text, you go, bluchh. This is boring. There’s nothing here. And pretty soon you’re going to go to a Web page and if there’s no video you’re going to say, ecch, there’s nobody home here. This is boring. But that’s not going to be tomorrow afternoon. Because we don’t universally have adequate bandwidth to make video be all that it’s going to be. And believe me, I am very bullish about video on the network.

But I’m talking about a window of opportunity here where I believe there’s a chance to capitalize on something that’s not just a beautiful … image and it’s not a small video. It’s something in between that can leverage our entertainment our learning.

Now, let me show you an example of what I’m talking about here. Here’s Lonnie Nielson, golf pro (shows Just-in-Time training demo).

LONNIE NIELSON [ON TAPE]: … back and through. Never want to straighten out or have dips and so forth throughout the swing.

PATRICK: Okay, well thanks for the tip there, Lonnie. Now. I want to take a closer look at this. Okay, I see what he’s doing. Let’s see if I can zoom in a bit on this. Now we got it. Now I want to rotate it. Okay, so see what I’m doing? This is just-in-time training, in a sense. It’s not video. It’s not a picture. Can you imagine doing what I just did by rewinding the video and playing it again? No, you want to be able to literally get in there and interact with what’s going on with this set of images. It’s a powerful notion, I believe, that we’ll be seeing quite a bit more of.

Okay. Commerce. Many, many issues here as well. I think the most important issue here has to do with the business model. Now, what I mean by that is to have something creative, have something different. Having an approach that says, just click here to see our catalogue and click here to buy is sort of necessary but not sufficient. I think what’s important is to introduce some new ideas.

And this is not so much a technology issue, frankly. It’s a business issue. It’s a business strategy issue. And in fact, I would say your business strategy on the Web is a lot more important than your technology. Now, my company makes technology and services, and you know, we want to provide that. But I would still say, number one is to know what you’re trying to do and what’s your value proposition to the consumer. What is it that you’re offering him.

I like what NetGrocer (netgrocer.com) is doing as good example of a business model. They provide fulfillment models. So I can say, I need this many potato chips and this salsa and cat food and this long list of ketchup and mustard and Tabasco. And all these things. And by the way, ship this list to me every four weeks. Just like that. Just ship it every four weeks. And this other list — ship that one to one of my children in college at such-and-such a place. Ship that one every five weeks. But change the quantity this potato — make that four bags instead of three bags. Fulfillment models. And I think we’ll see lots of other models that will enable — maybe bridal registries. Maybe auctions. Maybe find-a-deal kind of models. But just catalog shopping per se I think is a very small piece of the pie.

Now, another dimension of commerce is business-to-business. And depicted here is the automotive industry sort of at large and some work that we’ve been doing there to connect the manufacturer, the large manufacturer, with the subcontractors, and to enable the subcontractors to look into a Netfolder of the manufacturer and see the design of the part they’re supposed to be building and to allow the manufacturer to look into the supplier to see what their inventory levels are. And to be able to do this independent of what kind of technology they have. To be able to do this through these Netfolders, which are really Web pages that are circulated in a collaborative environment.

Now, a very, very good example, I believe, of what’s going on here in the business-to-business segment, which some people, by the way, believe is as much as 80 percent of the e-business opportunity — I’m not sure anyone knows just yet how that’s going to break down between business-to-business and business-to-consumer, but for sure, business-to-business is enormous.

This small company, Intralinks (intralinks.com), a start-up in New York City about a year old, I think not quite a year old, is in the business of providing loan syndication. Their customers are large banks. When a large bank wants to make a loan to the XYZ company they go to the Intralinks Website and they post this loan. And up to a couple of hundred potentially participating banks will take a look at this loan and say, yeah, I’m interested in this particular deal. The interest rate, terms of conditions sound good. Count me in. Click here to be part of this loan.

And through a collaborative process over a fairly short period of time this loan happens. There are no faxes. No phone calls. No bags of closing documents to carry into a conference room full of people. The attorneys, the administrators, the financial analyst, the participants of this bank collaborate through workflow on the Web in a highly secure area. This is an application that was built for this company by a business partner. Was outsourced into a network from a content hosting point of view, and actually into our network. And they provide this service to banks.

I believe the most recent numbers show that they’ve closed now 60 billion dollars worth of loans. So you read some of the numbers about XYZ company did so much business on the Web, and then you hear about something of this size. This is not a site you’ll find just surfing around. Because it’s a business-to-business site. But you can go there. www.intralinks.com. If you need to borrow a hundred million or so.

Okay, now. Collaboration is the third dimension of this. And this comes in many forms as well. Right here in the Chicago area is a company called Hewitt Associates (http://www.hewitt.com), which is the business of working with people. They have about 8,000 people in their company, and they work with many companies of all sizes in the HR area, compensation and benefits analysis and benefits support and so on. They’re using collaborative technology through Internet technology through Web servers to enable not only a collaboration among their people but between their people and people in other companies through an extranet. And I believe that’s the real future of collaboration, is to extend it across boundaries. To be able to seamlessly collaborate with high security in an environment that leverages the productivity on both sides of the filewall.

Now, here’s an interesting collaboration carrying that concept a bit further. Here’s a community in Plano, Texas that’s reaching out and collaborating with the whole citizenry. And it’s amazing what Plano, Texas is doing. The breadth and depth of information that they are making available to the people of that town is quite awesome. Burglaries by street. Does anybody care about burglaries by street? Well, they sure do. You know, people like to read the paper and see, well where is crime happening? Is it happening near where I live? Is it coming my way? Is there some way I can engage here? Is there some way I can report a suspected activity with the investigative department?

And then you have Plano reaching out to the people saying, how are we doing? Tell us a little about yourself so that we can improve our services as a police department to meet your needs. Now, carrying that a bit further, there are some very interesting thing going on with regard to this pipe I talked about and this single medium.


PATRICK: Car 14, that’s the Los Angeles Police Department. Now, I don’t know how many of you would go out and spend 200 dollars to buy a police scanner. I have to admit I’m a gadget person but I don’t have a police scanner yet. But on the Web we all do. Because it’s just packets. It’s just another form, another kind of activity coming through that single medium. And that’s the way that government services now are being extended to the people.

Now, last but not least in the collaborative space is a very important group of people that we used to call seniors. Now that I’m 53 I don’t call them seniors anymore. And if any of you are over 50 I’m sure you don’t think of yourself as a senior, either. This is a very interesting group of people. Third-Age Media (thirdage.com) has done quite a bit of study in this area. Some recent data they put forward showed that 19 percent of the users of the Internet are over 50. And half of them have bought something on the Internet and half of them have invested over the Internet.

An executive recently said to me in some large company, you know, John, this Internet stuff, this is pretty interesting. But when it gets easy enough for my mother to use, let me know. And you know, I think I’m going to start a mothers’ revolution. Because our mothers are using this technology. Our grandmothers are using it. Our grandfathers are using it. This holiday season they’ll be looking at the kids under the tree in video. These people are motivated. They’re not intimidated by the technology. There have been 14 marriages on SeniorNet (seniornet.com) now, or spawned out of SeniorNet. So we’re talking about real relationships here. There’s a lot of motivation for people to engage in that segment of our economy. By the way, they seem to have the time and the money to be pretty good consumers as well.

So what’s it take to make this e-business transformation? I think first is to recognize that this is a dramatic extension of information technology. It’s an extension, not a replacement. It’s the marriage of the Web and IT. The Web basically has become the 3270, the 5250, the VT100. Whatever kind of computer device you’ve thought about in the past, you now think about the Web as a client independent — it almost doesn’t matter what kind of a client you have as long as you can connect with Internet technology and engage in the applications.

Secondly, I think building the organization from the outside in — if you take a purely operational approach and start from the inside and work out to the Web, then you start to say well, I really need to reengineer that application before I’m ready to make it available to the Web. Well, that’s okay if you have a lot of time and not too much competition. But if you are short of time and have lots of competition, which is pretty much the case, I think, for all of us, then you might consider starting out where all the people are. Start simple. Connect through gateways, connectors, bridges in a very simple way. Maybe take the input, print it out and scan it or keypunch it back again. It doesn’t matter from the point of view of the user as long as they get the results. It starts simple and grow quickly to tie things together.

Connecting the dots is an important aspect of this. Web applications need to be thought of as mission-critical applications. Seven by 24. People shop and learn at lunchtime. It’s always lunchtime somewhere. And so the notion of well, that’s the Web server, we’re going to let the advertising department run that, we got important things to do over here in IT, is not a good idea. As you become an e-business seven by 24 becomes essentially — connecting the dots is about identifying — building a strategy to put the hardware, the software, the services, the education, the financing, the consulting, the networking, putting it all together and making it real. Just like you have your core information technology systems over the years.

And lastly, fueling the culture change. Who are the people in your organization who think outside of the box. Who are they. You all have them. Listen to them. You don’t have to put them in charge. You’re probably here in the audience, so this is preaching to the choir. But we need to work together with the management of our companies to make sure that we’re infusing that culture change. Talk to the kids. What do they think it’s going to be like. How would they like to shop. How do they see banking when they get out of school and have a bank account. What do they think it’s going to be like when they have a family. How much shopping with they do. How will they do it. What will it be like.

Okay. Computing is going to be everywhere. We’re moving into an environment where everywhere you look there are going to be computers in places you don’t look and don’t even know there will be computers. Little ones, big ones, medium sized ones. Telephone poles — you know that little green box on the telephone poles? There’s going to be a disk drive in there. A smart one. Caching Web pages to enhance the performance of the network. You need to have a plan for how you’re going to pull this together.

We call ours the Network Computing Framework. You don’t have to use ours. You can have your own and use somebody else’s. But I highly recommend having a blueprint. Just like you do for your management information systems plans, MIS plans as we used to call them. You need to have a Webcentric, Networkcentric plan for how you’re going to leverage this technology.

Standards to a higher level means that — I would say at this stage unless you’re very into the technology you don’t need to worry too much about the nuts and bolts of how the Internet works. There are a hundred working groups of the Internet Engineering Task Force working on how the Internet actually works. And they’re making terrific progress. I think they’re on all the right issues. … higher level when you start thinking about standards for how credit cards are used on the Network.

I don’t mean SSL to encrypt credit card numbers. I mean things like SET to ensure that the information needs of the buyer, the seller and the credit card bank are each met. That they get what they need and no more than they need. I mean standards for catalogues so that objects can be created to be sold in a catalogue and placed into different kinds of catalogues. Standards for privacy so that clients, PC’s can come in and talk to a server and negotiate what level of privacy is acceptable. These kind of standards are very important and we should all insist on them and push to get them and get them moving faster.

Java, I believe, is an important piece of this pie. I’m not speaking here about Sun and Microsoft and the various debates and issues with regard to the desktop. That’s not what I’m talking about. What I’m talking about here is the importance of Java (ibm.com/developerworks/java) as the glue to enhance the speed of deployment for building that back end. To enable the Web to be an effective window into those core applications. Whatever kind of window it is. But to enable the back end to be connected together. To provide the glue to connect your databases and your asynchronous communications capabilities and your various communications interfaces and to interconnect those things so that they can be effectively delivered out there to where all the people are.

Secondly, Java is very much about this notion of a universally connected world. Having to do not with a hundred million desktops but with trillions of things that need to communicate with each other, that need to have a mechanism that’s secure, that’s lightweight, that’s efficient. That large numbers of people know a lot about. i.e., all of the kids coming out of college today can write in Java, and to be able to interconnect all of these things.

And lastly, scalability. Now, scalability, first of all, is not about who has the biggest database. It’s not about who can do the most number of transactions under a controlled environment. It’s all about reliability, availability around the clock. It’s about security. And it’s about manageability. Which means, what happens when something breaks.

Now, we have this down to a science in our local area networks and our centralized systems of enterprises that we all belong to. We have it down to a science. When something goes wrong we know exactly what to do. Do we have that on the Web yet today? I don’t think so. Although we’re learning a great deal about it and improvising and inventing many technologies to provide for the scalability, such as we learned about at the Olympics and such as other people are doing on the Web. It’s really important to think through what you really want out of scalability. And I suggest it’s not about bulk but it’s about making that bulk be available, reliable, secure and manageable.

Now, I think there’s an important discussion that all of us should engage in that has to do with the foundation of the Internet. What is the foundation we need to ensure that we will have a growth — that we can continue the growth and health of the Internet. I believe there are five most important issues. There are many issues, of course. But I believe these five are fundamental. And I believe it’s quite important that the private sector get into a self-regulatory environment quickly to address these issues. And to get the rest of the world comfortable that these issues are under control.

If we don’t we will have regulations put forth to do it for us, or to attempt to tell us how to do it. There currently are over a hundred bills pending to in some way regulate the Internet. Can you imagine regulating the Internet? That’s like regulating the wind. That’s like writing a regulation on how the weather’s going to be next week. But that is not stopping people from trying because there’s a lot of pressure here on these various issues.

Now, just briefly, what’s behind these have to do with the following. First, in security, the issue has nothing to do with, is it strong enough. It’s plenty strong enough. There’s not even a go theory on how to break a full-strength encryption key. The basic technology … infrastructure provides authorization, authentication, integrity, confidentiality and non-repudiation. Five corps attributes that enable a really secure environment on Internet so that people can determine who other people are. You can establish you are who you say you are. It’s rock solid. And there’s a lot of excellent solutions out there.

No, the real issue is, what are the policies and how do you administer security in your company. Do you have someone that comes to try to break into your network on purpose? Say, once a month or once a week or once a quarter? And if successful, shows you how they did it and shows you how to prevent it in the future? How seriously do you take passwords? Do you have people with post-its stuck on the front of the glass of PC’s with their password on it? Or if it’s not there just go through the drawer and you’ll find it in the drawer? How do you react to that? Do you audit your security procedures and policies? How runs your file wall? What’s the state of their morale? When did they get their last increase? Do you have any disgruntled employees controlling the password distribution of your key applications? What is the password of your file wall? Good chance it’s the word, password. So security, there are some important issues, and … is it strong enough.

Content labeling has to do with providing the assurance to parents and teachers that the Internet is okay. Many of them are not sure it’s okay. They’re wondering. And we have a choice here. We can utilize the technology that’s available to deal with this or we can have regulation. And I know which is most costly, and I think you do to. The Platform for Internet Content Selection (PICS) is a superb set of protocols devised by the Worldwide Web Consortium (w3.org). Now agreed to around the world. We need to deploy it. We need to use it on our websites. We need to utilize software available at the consumer level for our children. It does not provide censorship. It provides a way for parents and teachers to decide what they want children to see or not to see.

PICS also provides for the ability to have proxies. And these proxies will spring up over the next year or two. There’ll be label bureaus and you’ll be able to give a proxy for your feelings about content. You may pick the Christian Coalition. The next person may pick the Betty Crocker or Walt Disney or the Cleveland PTA. And those label bureaus will provide readings. And browsers can be configured to say, Billy can see this and Sally can see that.

Privacy, enormously important. I’ll ask, you know, how many have a privacy policy on their website? I can’t see you out there anyway with all these lights. But I suspect I wouldn’t see a lot of hands. Actually, the Federal Trade Commission just recently did a study on this and they didn’t see a lot of hands either. This is an area where we really don’t want to have regulation because it would be very burdensome, costly, difficult, perhaps impossible to administer. But privacy is really, really important.

Now, by having a privacy policy I’m not suggesting that you can’t use information that you gain from people who come to your website. That’s some very important marketing information. And in fact, can be useful not only to you at the company but valuable to the person who provided it. But a privacy policy needs to be disclosed. Now, your privacy policy may be, we ask for your information. If you give it to us we sell it to anybody that wants it. That’s a privacy policy. And some people will think that’s just fine. And in fact, P3P, the Platform for Privacy Preferences, is a new standard emerging from the W3C and it may even be out this week, to allow for your browser to interact and negotiate with the server on what is okay.

And some people would say, well I’ll tell you what, if I get a five percent discount on a purchase from your … I’ll tell you my life history and you can do whatever you want with it. Put me in a drawing for a free cruise around the world — I’ll tell you everything. Other people would say, I want to be anonymous. I want your assurance that if I give you information to buy this particular product I don’t want to get an e-mail from somebody saying, well you bought this so you must be interested in that.

So privacy is a huge thing. In Europe it’s enormously important and taken very, very seriously. And there is regulation. And so we have an opportunity here. It’s still soon enough. But we need to move fast. And I urge you all to go back to your companies and find out, do we have a privacy policy? Well, let’s get one together. And by the way, if you have one, make sure that you follow it.

Now, governance has to do with who’s in charge of the Internet anyway. And this is a long, complex discussion that I won’t bore you with. You can visit my website and look in the Internet foundation issues section and you’ll see a number of links about this topic. It has to do with the fact that the Internet, the way it works today, has a couple of linchpins that are actually controlled by the U.S. government.

Now, the U.S. government doesn’t want it to be that way. And it’s very anxious, actually, to turn this over into the international global private sector. Non-profit basis. In a way to make everybody happy. It’s very complicated to do because there are many different kinds of features and organization involved. But I think there’s a reasonably good plan right now and I think we should all get behind it. And the worst thing we could do is to … for the next couple of years and potentially slow down the growth and health of the Internet.

Lastly is infrastructure. Infrastructure has to do with, can the Internet grow? Are we going to run out of addresses? Should e-mail actually be the same priority on the Internet as a digital interactive video conference? Are the backbones going to be able to handle all this traffic? There’s a hundred thousand new web pages per hour. Does it ever break? Are we going to have brown-outs? Well, that’s what the infrastructure is all about. I’m quite optimistic about this. The glass is half full, not half empty, but I don’t think we should take this for granted.

And fortunately, there are a lot of pioneers out there focused on this. Internet2 is well underway (internet2.edu). The University Corporation for Advanced Internet Development, UCAID, is a non-profit corporation consisting of 125 universities, research universities, working together on the next generation of the Internet. This afternoon right here in Chicago is being announced a major new initiative by Northwestern University with IBM — and also supported by Cisco and Ameritech — to put together a center at Northwestern (it.northwestern.edu) to do advanced Internet research to begin to put together what’s it going to be like.

What does it mean for medicine. What does it mean for banking, insurance, manufacturing. How are we going to take advantage of these several orders of magnitude of speed that will be made possible by synchronous optical networking technology. And how will we take advantage and how will we deploy quality of service that will allow us to discriminate among packets. And to say, e-mail packets … in the slow lane. Interactive video conferencing packet, you get in the fast lane and accelerate through the network to assure quality of service.