Government Affairs

FRAMINGHAM (01/27/2000) - The inside story on * The IT trade associations * The key legislative players * The issues that divide vendors and CIOs In 1999, the Information Technology Association of America (ITAA), an Arlington, Va.-based trade group with a $6 million annual budget, spent $1 million to lobby federal legislators and promote the group's political agenda.

The number-one issue for the ITAA: Y2K-specifically the Y2K Act, which limits litigation against companies responsible for Y2K glitches. Passage of this bill was a huge victory for the IT vendors that constitute the ITAA, yet a significant setback for their CIO customers who got stiffed by buggy software.

The ITAA is hardly alone. It's one of about a dozen IT industry associations staked out on Capitol Hill, each of them spending millions of dollars annually to affect legislation on behalf of their technology vendor members. Intel Corp., Microsoft Corp., Oracle Corp., Sun Microsystems Inc.-each of these big-name suppliers holds multiple memberships among these groups, sitting on boards and committees, helping draft their political marching orders.

And Y2K is but one of several policy issues these vendor groups have influenced. They were huge players in swaying Congress to increase the quota for H-1B immigrant work visas in 1998, and last year they helped convince the Clinton administration (in a particularly stunning policy reversal) to ease export restrictions on encrypted software.

Now, post-Y2K, lawmakers are finally prepared to debate such hot-button technology issues as e-commerce and intellectual property regulations-issues in which technology vendors and customers alike have vested interest-and no doubt the IT trade groups are primed and ready to be the voice of the vendors.

But who will speak for the CIOs?

CIOS: MIA In a city where image and influence are everything, CIOs have neither. Their only approximation of a trade association is the Society for Information Management (SIM), a Chicago-based professional group that relies largely on a bare-bones budget and member volunteers. Unlike the IT trade associations, SIM has no significant presence in Washington. And unlike the vendors, CIOs have no visibility with key policy-makers. In fact, one Republican congressman-considered one of the most IT-savvy legislators in Washington-had to ask when contacted by CIO, "What exactly is a chief information officer-the person who manages the computers, or the one in charge of communications?"

Worse than unknown, CIOs are out of touch. "Most [CIOs] don't have a clue what's happening in Washington," says Dr. Leon A. Kappelman, a SIM member and associate professor of business computer information systems at the University of North Texas in Denton. "We focus largely on internal and industry matters, but we're not paying attention to what's happening in government."

True, the companies CIOs work for belong to their own trade associations, but these groups lobby for their own industry-specific policy issues-health care or tax reform, for example. They leave IT issues to the IT trade groups, which consequently are the only voices many lawmakers hear. Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, one of Washington's largest and loudest business associations, believes CIOs can balance this perspective by asserting themselves as the people who know IT best. Can is the operative word; so far CIOs have chosen to keep their distance from Capitol Hill. "[CIOs] say, "We don't do Washington,'" grumbles Donohue, who doesn't hesitate to label IT executives "arrogant" and "naive" for refusing to get in the game with the issues that affect them. "That's not the way our society is organized," Donohue says, adding, "People who 'don't do Washington' eventually come around."

VENDORS IN ACTION Government, like nature, abhors a vacuum, and in the absence of CIOs, the vendor-driven trade associations have stepped forward to flex impressive muscles. Funded by a who's who of American high-tech vendors, these trade groups employ researchers, marketers and legions of registered lobbyists to focus on political agendas set by their member subcommittees. And it works.

Among some of the IT trade groups' recent victories:

Y2K. This issue was brought to the federal front burner in 1995 by the ITAA, which established a Y2K Task Force to educate the public and private sectors about the millennium bug, as well as to influence legislation. The ITAA was a key supporter of the 1998 Y2K Information and Readiness Disclosure Act, which forced companies to go public with their Y2K preparedness, and the aforementioned 1999 Y2K Act, which limits post-Y2K litigation. This latter bill was controversial, dividing opinion along IT vendors and customer lines. Of course, in the end, the vendors had roughly a dozen well-financed IT trade associations supporting their stance; the customers had none.

Encryption. Although it was the Clinton administration that stepped forward to ease export controls on encrypted software, that didn't come about until years of hard lobbying by the IT trade groups. Arguing that encryption restrictions hampered the global competitiveness of the American software industry, the vendors got backing from Rep. Bob Goodlatte, who built a groundswell of congressional support for his Security and Freedom through Encryption (SAFE) Act of 1999. The SAFE Act subsequently was championed by at least two IT trade groups-the Business Software Alliance and Software and Information Industry Association, both based in Washington and both supported by the likes of Microsoft and Sun Microsystems. Not that the encryption reversal should be construed as a blow against CIOs-indeed, their companies may well benefit from fewer restrictions. But it is a sign of how the White House can be swayed by the IT power brokers.

IS Staffing. The ITAA again was at the forefront of the effort to publicize the high-tech staffing shortage and affect federal legislation to ease it. In Congress, the ITAA and several other IT trade associations successfully lobbied-twice-to raise the quota of H-1B visas for nonimmigrant foreign workers. While the extra influx of foreign programmers is good for IT suppliers who operate on short-term product development and delivery cycles, it does little to address the needs of non-IT companies that are starving for help recruiting, retaining and reskilling permanent IT staff.

Perhaps the IT trade groups' most visible show of force was a mid-1998 "fly-in" of more than 30 high-tech CEOs (Intel's Andy Grove and Hewlett-Packard Co.'s then CEO Lew Platt among them) to meet one-on-one with key government leaders to discuss three specific issues: Y2K, encryption and Internet taxation. A public relations stunt? Perhaps. But it was a fruitful one-within a year, Congress passed the Y2K Act and a three-year moratorium on new e-commerce taxes, and then the Clinton Administration performed its celebrated encryption flip-flop.

Harris Miller, president of the ITAA, downplays the significance of the lobbying effort on behalf of IT vendors. "Lobbying is another word for education," Miller says. "The media likes to talk about 'buying votes,' as if this were all about back-room politics, but at the end of the day you've got to have intelligent arguments on your side if you're going to sway people."

And yet, as the tobacco and gun industries have proven, a big pocketbook and a persistent message also provide great powers of persuasion. With these capabilities, even the smaller IT trade associations wield great influence over lawmakers. Consider the Information Technology Industry Council (ITIC), a Washington, D.C.-based trade group of just 30 members (the ITAA, in contrast, boasts 11,000 direct and affiliate members). Yet, the ITIC's membership includes HP Co. and Microsoft plus a $3 million public policy budget earmarked for pushing the group's political agenda. Rhett Dawson, president of the ITIC, says big-name members bring instant credibility when it's time to discuss the group's primary e-commerce and intellectual property issues. "We're relatively small, but because of [our members'] size, we have a presence in Washington.

They give us a lot more agility, visibility and people on the ground," Dawson says. "I find that if we can get our message and participation together, then we can usually succeed at what we want to do in Washington."

WHEN WORLDS DIVIDE If CIOs quietly support the vendors' positions on such issues as encryption and e-commerce taxation, then, fine, they've got friends in Washington. But what happens when CIOs and vendors disagree?

Such a dispute arose in early 1999, when IT professor Kappelman, representing SIM on the ITAA's Y2K Task Force, came out against the Y2K Act. Unwilling to tie CIOs' hands with litigation limits, Kappelman knew he was going against the ITAA's vendor-friendly grain, yet his minority opinion was tolerated-until he spoke his mind to Congress. After that, he was barred from task force meetings.

"They didn't mind if I disagreed privately," Kappelman says, "but as soon as I went public, that was it."

The ITAA's Miller defends the Kappelman ban. "Once he made it clear that he was totally opposed to our strategy, we did what we'd do to any dues-paying member: we excluded him," Miller says. "You can't have the fox invited to the chicken meetings. If we did that, then anything we discussed could potentially end up in The Washington Post the next day."

But if it's squelched, then how can the minority voice be heard? This is Kappelman's concern. "The vendors are the only voice; the customer has none," says Kappelman, who fears the ramifications of lawmakers deciding IT issues solely on vendor input. "If the voice they've been hearing tells them [a position] is right, and no other voices are being heard, then eventually it's going to look right to them."

OPPORTUNITIES TO INFLUENCE As election time nears, Internet regulation, e-commerce taxation and digital privacy will be huge issues among incumbents and challengers. And with these lively debates come prime opportunities for CIOs to be heard.

A good place to start is by talking with local, state and national legislative representatives. There's a dual opportunity here: a chance for CIOs to express their opinions and to educate legislators about IT issues. Technology is an arcane science to many veteran politicians, who appreciate a little extra help getting up to speed with IT concepts and jargon. "Politicians have absolutely been way behind the times," says Goodlatte, whose own IT education began with his appointment to the House Judiciary Committee's courts and intellectual property subcommittee. "Members [of Congress] are becoming increasingly aware of what the Internet means and how it affects their constituents," Goodlatte says, but given the steep IT learning curve, "there's a much better opportunity today than ever before for people to contact their congressional representatives and be heard."

One piece of advice: limit your overtures to your own representatives; don't send spam e-mail to all 435 House members, saying "I need this." "If you do, then I guarantee 434 people are going to ignore you," Goodlatte says. "If you can't vote for them, then they aren't going to respond. Just because technology makes it easy to e-mail everyone in Congress, some people assume their [spam] will have impact. It won't."

The key to influence is information. To be truly effective, CIOs must keep abreast not just of the latest IT issues, but of how the trade associations are tackling them in Washington. This information is readily available on the trade groups' Web sites. CIOs also must offer their own informed opinions, either individually to key lawmakers or through their own business or industry associations. Traditionally, the non-IT trade groups have shied away from IT issues, but CIOs can change that mind-set by getting involved and hammering home IT's strategic importance to business. "There is a massive opportunity for [CIOs] to seize on the idea that the economy is as strong as it is because national productivity is at an all-time high," says Donohue of the U.S. Chamber of Commerce. "Part of that productivity can be directly attributed to the application of technology to business. The tech guys need to be talking about this issue."

Whether CIOs as a constituency can speak loudly and persistently enough to balance what lawmakers are already hearing from the IT vendors is an open question. But the only alternative to trying is to accept being effectively disenfranchised-totally removed from the policy-making process. "Recognize that government is always going to hear from someone on these issues," Donohue says.

"And remember, over time the man who pays the piper gets to call the tune."

How do you think CIOs can peddle their influence in Washington? Tell Senior Editor Tom Field at

THE TOP 10 ISSUES Here are the hottest IT topics in Washington-and why you should care about them 1. Encryption. The Clinton administration has eased restrictions on the export of encryption software, but only global business leaders-including CIOs-can determine whether the new limits are relaxed enough.

2. Y2K. Y2K liability was a big issue in 1999. This year CIOs must share their millennium successes and setbacks to help prevent such a situation from happening again.

3. Taxation. Whether they work at Inc. selling books to consumers or Dell Computer Corp. selling PCs to businesses, CIOs should be concerned with the question of whether to tax e-commerce transactions. Congress is mulling this issue now.

4. Intellectual property. How does a company like Time Warner Inc. protect its copyrighted material-magazine articles, music and cartoon images-in a digital environment? The Clinton administration advocates market-driven self-regulation, but content providers may want to send a different message to Congress.

5. Privacy. Should government control how financial and health-care institutions transmit sensitive data? CIOs have a vested interest in helping self-regulation succeed or risk seeing privacy standards imposed by Congress.

6. Telecommunications. The Telecommunications Act of 1996 paved the way for open competition in the telecommunications marketplace. But is the marketplace working as advertised? CIOs are in the best position to answer this question for regulators.

7. IS staffing. Congress has raised the quota for H-1B nonimmigrant work visas-good news for high-tech companies that employ foreign programmers. But what about for nontechnology businesses? CIOs across industries must draw attention to their unique recruiting, retention and retraining concerns.

8. R&D tax credit. In 1999, Congress passed a temporary extension to the federal tax credit, which gives a tax break to all companies that avail themselves of IT skills training. Several IT trade associations are lobbying to extend this tax credit indefinitely, but it would behoove CIOs from non-IT businesses to express their support too.

9. Information Technology Agreement. The original ITA helped eliminate foreign tariffs on U.S. high-tech exports. Now industry leaders want to see customs duties eliminated on other IT-driven products, such as telecommunications instruments and some consumer electronics. ITA is quickly becoming a broad business issue that CIOs should weigh in on.

10. Critical infrastructure protection. Government sites aren't the only targets of electronic terrorists. Public utilities, financial institutions and hospitals are also at risk of hacker attacks. Private-sector CIOs have much to gain-and much to share-from helping government protect critical electronic assets.

THE PLAYERS These major trade and business associations influence IT policy-making in Washington American Electronics Association 601 Pennsylvania Ave. NW, North Building, Suite 600, Washington, DC 20036 202 682-9110 Business Software Alliance 1150 18th St. NW, Suite 700, Washington, DC 20036; 202 872-5500 Information Technology Association of America 1616 N. Ft. Myer Dr., Suite 1300, Arlington, VA 22209; 703 522-5055; fax: 703 525-2279 PRESIDENT Harris Miller MISSION The group represents business/government interests of a broad range of IT product and service providers. MEMBERS It includes 11,000 direct and affiliated members-mainly IT hardware and software vendors, including 3Com Corp., AT&T Corp. and Microsoft Corp. ISSUES Encryption and authentication, electronic commerce, intellectual property protection, Y2K challenge and critical information protection; ITAA chartered its Y2K Task Force in 1995, and in 1997 the group was among the first to publicize the IT workforce shortage. RESOURCES ITAA has a $6 million annual budget, roughly $1 million of which goes directly toward funding lobbying activities.

Computer and Communications Industry Association 666 11th St. NW, Suite 600, Washington, DC 20001; 202 783-0070 Electronic Industries Alliance 2500 Wilson Blvd., Arlington, VA 22201; 703 907-7600 Software & Information Industry Association 1730 M St. NW, Suite 700, Washington, DC 20036; 202 452-1600 President Ken Wasch MISSION The group represents the business/government interests of the software and digital content industries. MEMBERS 1,400 software companies and digital content providers; headed by a 23-member board of directors including senior executives from Microsoft Corp., Oracle Corp. and Sun Microsystems Inc. ISSUES Intellectual property protection, encryption, privacy; big emphasis on software piracy issues. RESOURCES $8.7 million annual budget, $2 million of which goes toward public policy issues; full-time staff of 45; employs nine lobbyists in Washington, D.C.

Electronic Messaging Association 1655 N. Ft. Myer Dr., Suite 500, Arlington, VA 22209; 703 524-5550 Semiconductor Equipment and Materials International 805 E. Middlefield Rd., Mountain View, CA 94043; 650 964-5111 Information Technology Industry Council 1250 Eye St. NW, Suite 200, Washington, DC 20005; 202 737-8888 PRESIDENT Rhett B. Dawson MISSION Represent interests of the nation's leading IT product and service providers. MEMBERS The crme de la crme of high-tech vendors, including Compaq Computer Corp., IBM Corp., Microsoft Corp. and Xerox Corp. ITI membership claims to have combined worldwide revenues in excess of $440 billion, employing 1.2 million people in the United States and conducting 50 percent of all U.S. IT research and engineering. ISSUES Global trade is the biggie. ITI championed the loosening of encryption export controls and now seeks to expand the signatories and scope of the Information Technology Agreement (ITA) and ITA II, which seeks to reduce foreign tariffs on U.S. IT exports.

The Technology Network 101 University Ave., Suite 240, Palo Alto, CA 94301; 650 463-1510 Telecommunications Industry Association 2500 Wilson Blvd., Suite 300, Arlington, VA 22201; 703 907-7700 The U.S. Chamber of Commerce 1615 H St. NW, Washington, DC 20062; 202 659-3190 www.uschamber1/ PRESIDENT Thomas J. Donohue MISSION Represents broad business and political interests of the nation's regional chambers. Or, to quote Donohue: "We take names and kick butt for American businesses around the world." MEMBERS Include 3,000 state and local chambers, 775 business associations and 85 American chambers of commerce abroad. ISSUES Easing encryption export controls, preventing frivolous Y2K litigation, preventing new business tax increases. RESOURCES Annual budget of $85 million, $35 million of which is funneled into public policy issues; staff of 850, 400 of whom focus on public policy; employed 17 full-time lobbyists.

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