FRAMINGHAM (07/17/2000) - DATA MANAGEMENT IT TO PUMP YOU UP By Matt Villano You might expect the gym, a place of clanking iron plates and mind-numbing treadmills, to be the last holdout against IT infiltration. But just step into New York City's Asphalt Green fitness center to shatter that notion: Every machine on its main workout floor has a tiny hard drive and a computer screen on which fitness freaks can track their workouts. The machines are connected to a local area network so that club members can take their workout records with them effortlessly as they move from station to station, updating data with every rep.
Asphalt Green's system is the brainchild of Stamford, Conn.-based FitLinxx Inc.
(www.fitlinxx.com). More than 200 gyms in cities around the country have the system too, joining what Jay Hartley, FitLinxx vice president of software development, calls a revolution in "techno-exercise." For a monthly fee, FitLinxx technicians outfit health clubs' weight-training and cardiovascular equipment with new hardware and software and are on-call for service. The technology guides club members through their workout regimes, suggesting weight or resistance levels, recording performance and generally overseeing their fitness programs. Every member has a personal ID number that tells a machine who is using it.
"We like to think that we extend [the services of] the personal trainer you may not have access to all the time," says Hartley, who started his IT career in financial services.
While FitLinxx may be a leader, it's only one of a multitude of IT companies now revolutionizing the ordinary workout. San Francisco-based Netpulse Communications (www.netpulse.net), for example, takes a different tack. Rather than manage and record your workout data, its products let you multitask while working out. Netpulse replaces the standard display screen on cardiovascular equipment with a 15-inch screen that, once connected to a local server, lets you surf the Web or exchange e-mail. E-Zone (www.ezonenetworks.com) of Napa, Calif., offers "personal entertainment systems"; fitness enthusiasts can either plug into motivational or instructional workout programs or listen to compact discs or watch TV while burning calories.
"Fitness companies have moved way beyond the golf pencil and the workout card," observes Thomas Proulx, Netpulse's CEO. "Anyone in the industry will tell you that the future of fitness is IT."
DEPARTMENT OF BIG, SCARY NUMBERS 8 percent: portion of 1999 e-commerce that was business to business US$150 billion: total value of B2B e-commerce sales in 1999 $3 trillion: projected total value of B2B e-commerce sales by 2003 233 percent: average increase in stock price of Internet companies at IPO in 1999 Sources: The Economist, Feb. 26, 2000, The Internet Index.
WIRELESS PRET-A-PORTER Curvy. Chrome-y. Colorful. Compact. Industrial designers have incorporated those characteristics into the sleek styling of wireless devices. In the process, they've transformed personal digital assistants (PDAs) from utilitarian tools to chic accessories that make a statement about the personalities of their owners.
Just flip through the pages of Vogue and GQ and you'll find models now completing their designer ensembles with Palm Vs and Nokia cell phones. Indeed, these devices have as much presence in fashion magazines as Herms carves and Rolex watches.
It's not just the beautiful people who carry these accoutrements close to their hearts. Visit any airport and you'll find professionals with pagers, PDAs and cell phones peeking out of pockets. "Because you carry them around all the time, these devices become very personal," says John Cook, senior director of product marketing, consumer products group, for Santa Clara, Calif.-based Palm Inc. "They say something about you. When you flip the antenna [of the Palm VII], you're sending the signal, "I'm connected."
Nonetheless, according to Marie Essex, chair of the fashion design department at New York City's Parsons School of Design, wireless accessories are not necessarily driving fashion designers' thinking. Although designers use these tools themselves, they aren't designing for or around them. Yet, she says, "several years ago, licensing really took off, with designers' names going on everything from braces to coffins, and technology won't be any different. No doubt you'll soon be able to get the Donna Karan PDA. Or you'll buy a Gucci bag that will come complete with a matching phone." -Meridith Levinson WASHINGTON WATCH By Elana Varon ANTITRUST FEVER Think the government has shot its bolt on the Microsoft antitrust case? Think the trust busters will be satisfied with Bill Gates' scalp? Think again. The feds are now cocking their collective eyebrows at online exchanges. So if you're thinking about joining one (and who isn't?), this might be a good time to call your lawyers.
A couple of online collaborations have already drawn the attention of government lawyers and Congress, both of which are asking whether competition will be quashed by the B2B exchange planned by the Big Three U.S. automakers or by a proposed consumer travel website, Orbitz, supported by 30 airlines.
(Travel agents are understandably concerned about the latter.) In April, the FTC and the Justice Department jointly described their parameters for determining the illegality of such newfangled collaborations. But Hillard Sterling, an antitrust lawyer with Gordon & Glickson in Chicago, says it's anybody's guess what constitutes unlawful collusion online. "This really is the new frontier of antitrust law," he says.
If that has you reaching for the Maalox, Sterling says relax. If your B2B or B2C exchange seems aboveboard--that is, you're not excluding your competition or fixing prices--then the government is less likely to come calling.
Nevertheless, Sterling advises, it's a good idea to factor in the risk of an antitrust suit when you're developing your deals.
Still nervous? Stephen Margolis, an economics professor at North Carolina State University, says regulators may give electronic marketplaces a pass until they mature. "There's almost an [unofficial] infant-industries waiver," he says, because the government doesn't usually go after startups. Trouble comes when a venture grows. Large, mature companies have legal departments attuned to antitrust issues. Margolis says Microsoft's problems began when it grew faster than its awareness of its legal exposure.
For now, regulators are using "pre-e" standards to assess whether online exchanges are anticompetitive. But Margolis suggests that one significant test--how much market share a venture controls--might not apply online. A successful electronic exchange is supposed to cover an entire market, he says, but that doesn't necessarily mean participants are trying to limit customer choices.
If regulators go after exchanges just because they dominate a market, "everyone will find themselves in litigation all the time," he says. But the evolution of e-commerce won't wait while these philosophical questions are hashed out.
BE A SQUEAKY WHEEL Not surprisingly, in the e-commerce race, most federal agencies are stuck in the starting blocks. Although the 1998 Government Paperwork Elimination Act mandates that the government be doing business online by 2003, one federal e-commerce expert says agencies may need a push to take that charge seriously.
"If companies want government agencies to do business with them online, they should start citing the law," advises Tony Trenkle, coordinator of online services for the Social Security Administration. Social Security has already tested new systems for collecting W-2 forms online from 101 employers, and the system has the potential to collect them from 6.5 million.
Chuck Liptz, who's in charge of the Social Security project, says that agency officials surveyed businesses to get ideas on the technologies and security safeguards they wanted. But it's not clear whether other agencies will ask the same kinds of questions--mostly because they don't have to. The White House Office of Management and Budget, which has to approve agencies' online plans, hasn't decided whether those plans should be made public.
Got news or views about what's happening in Washington? Send e-mail to email@example.com.
FAST, HYPED AND IN THE RED Sales at big dotcoms like Amazon are finally taking off, but the losses are proportional to the gains. Can rapid growth help the dotcoms turn the corner on profitablility? Not this year.
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LEADERSHIP THE IT WORLD IS NOT ENOUGH By Elizabeth Heichler Ken Michaelchuck, CIO of Philip Morris Cos., was happy to land a divisional CIO who had not previously worked in IT. He came from operations--like Michaelchuck himself.
And that's not as odd as it sounds.
"There's a lot of demand [from CIOs who hire IT leaders] for getting outside the technical point of view," says Norman McEachron, vice president of Stamford, Conn.-based Gartner Consulting in the San Jose, Calif., office, who has conducted extensive surveys on the roles and relationships of CTOs and CIOs. The kinds of people who make good leaders in today's global economy may be different from those who used to succeed in IT. These days, "people who focus on internal things might not have the necessary understanding of stakeholders' customers," McEachron adds. "We've got a whole generation of people used to administration and systems upkeep and acquisition of infrastructure. Now we have to look at IT as deployment of competitive tools."
To round out individuals whose technology skills outweigh their business acumen, Anthony Foster, CIO of Imperial Chemical Industries in London, advocates giving them work experience throughout the business. "Either expose them to business issues or put them at the table where business is being discussed," he advises. Early in his own career, he worked as an operations line manager for a large energy multinational in Canada, which he says was a tremendous learning opportunity that gave him credibility among his business associates. "In a later assignment," Foster adds, "I was human resources manager for a division in that same multinational. This allowed me to work very closely with the division president and actively participate as a member of his executive committee. These early career experiences have been critical to my development."
SOFTWARE DEVELOPMENT SQUARE DANCE By Karen Witham Lynch Harvi Sachar's background in IT management has given him firsthand experience with the frustrating and time-consuming process of finding qualified software development talent. So in July 1999 he launched ITsquare.com, in San Jose, Calif., with the goal of facilitating working relationships worldwide between small and midsize software development firms and companies seeking their expertise. In addition, Sachar hoped to give those developers exposure to new markets and opportunities. He wanted it to be, as the name suggests, a virtual "town square" where companies could conduct their software services business.
ITsquare's online database currently includes more than 2,000 companies, which comprise more than 80,000 individual developers. About 75 percent of those companies are U.S. firms; the rest are headquartered overseas. ITsquare's goal in the near future is to have its database split more evenly between U.S. and foreign vendors. The service is free to clients. Vendors pay ITsquare a transaction fee that's 5 percent to 15 percent of a project's cost, once they receive payment from the client.
"We help manage the process of software development and collaboration," says Sachar. "Then we provide a secure work area where all transactions are tracked and documented. In fact, one of the biggest values we bring to the table is workflow process automation."
This automation can cut by half the time it takes to reach and sign a contract agreement. According to Sachar, that process, including finding qualified vendors, reviewing their backgrounds and wading through their bids, traditionally takes around six weeks. Now all of that can be completed in one to three weeks.
HOT TOPIC I.T. VALUE CAN'T MEASURE HEAT WITH A RULER By Katherine Noyes You may think your IT group is delivering significant value to your company's bottom line, but do higher-ups agree? Possibly not: In the wake of costly Y2K, ERP and e-commerce initiatives, there's been a widening gap within many organizations between the IT group's opinion of its value and top management's perception of that value.
What's a CIO to do? A recent report by Meta Group (www.metagroup.com), of Stamford, Conn., offers some suggestions. First, figure out how the IT organization is currently expected to add value to the business. According to Meta, most companies envision one of three roles:
1) IT supports the business primarily by providing tactical support for current business processes.
2) IT operates like a business within a business, using its products and services to provide business solutions.
3) IT becomes the business by fusing operations and eliminating major differences between the business and IT planning, performance measurement and the like.
Once you've figured out which one best matches your company's current expectations for IT, make sure you're measuring the value of IT appropriately--using the wrong metrics can hurt IT's credibility, Meta asserts.
If your group is expected to fall within the first expectation, for example, value should be measured in terms of cost and efficiencies. For the second, the focus should be on effective resource investment. And for the third, according to Meta, what's most important is real value delivered to markets, such as IT's contribution to market penetration.
Finally, think about how you'd like the company to perceive your IT group. Meta recommends creating a "value agenda" that defines and addresses the gap between current and desired value positions. That agenda should include strategies for bridging that gap: techniques for aligning value expectations, identifying value opportunities and creating a value "playbook," or action plan.
Not surprisingly, Meta recommends using its Value Assurance Program to get your organization headed in the right direction. But whatever route you take, the end result--better alignment with the business--should be well worth the trip.
THE WEB LEGENDS OF THE FOLLY You know that a lot of your organization's bandwidth is eaten up by a constant stream of messages like the one below. What can you do but laugh?
"On my way to the post office to see whether my free case of M&M's had arrived (after all, I had forwarded an e-mail to five people, celebrating the fact that 2000 in Roman numerals is MM), I ran into a friend doing errands for her neighbor who was sick from having ingested a rat while eating Kentucky Fried Chicken--unsurprising, really, since everyone knows there's no actual chicken in that stuff, which is why the company changed its name to KFC. Anyway, bad luck for that guy because he had just gotten out of the hospital. Seems he went to a bar one night and woke up the next day sore all over, in a bathtub full of ice. When he stood up, he realized that his kidneys had been stolen. A note on his mirror read, "Call 911!" He tried, but a voice on the line asked him first to press #90, which he did, unwittingly giving the bandit full access to his phone line at his own expense, and he couldn't get through. He would have e-mailed for help but was afraid to use his computer because it contained a hard-drive-destroying virus in an e-mail entitled "Good Times." He knew it was real because he himself was working on software to prevent global disaster when all the computers get together and distribute the $250 Neiman Marcus cookie recipe.
He then went to a pay phone. But when he reached into the coin-return slot, he got jabbed with an HIV-infected needle around which was wrapped a note that read, "Welcome to the world of AIDS." Despite his condition, he tried to drive himself to the hospital. On the way, he noticed another car driving without its headlights on. To be helpful, he flashed his own lights and was promptly shot by people in the other car as part of their gang initiation rites.
Let that be a lesson to you, and send this story to everyone who sends you junk mail. If you don't, you'll get a flesh-eating disease from Caribbean bananas, you'll be scooped out of the ocean while scuba diving and dumped in the middle of a forest fire, and the government will tax all your e-mails forever. That must be true--I read it on the Internet." -Adapted from the Web.
RUMOR KILLER If you doubt some of the things you read on the Net, despite their fervent claims of verity, bookmark one of the following sites. They track the origins and strange lives of Internet hoaxes, rumors and junk mail, and even find a legitimate item or two out there. When you get that next heartrending plea for electronic signatures, go to your urban legend debunking site and, finding that particular message listed, rest assured that you are not being apathetic, just smart.
* Urban Legends and Folklore (urbanlegends.about.com/culture) is the easiest to navigate and most joyously sarcastic of the bunch.
* Urban Legends Research Centre (www.ulrc.com.au) lets you submit a research request.
* Urban Legends Reference Pages (www.snopes.com) sorts items by category (animals, Coke, sex...) and offers a good list of books and other sources of information on urban legends. -Sandy Kendall OFF THE SHELF Edited by Carol Zarrow THE LEADER WHO CAME IN FROM THE COLD Leading at the Edge: Leadership Lessons from the Extraordinary Saga of Shackleton's Antarctic Expedition By Dennis N.T.
Perkins Amacom, 2000, $24.95
I was in my early 20s when I first read Endurance: Shackleton's Incredible Voyage, Alfred Lansing's fine account of Ernest Shackleton's 1914 Imperial Trans-Antarctic Expedition, and it remains my favorite leadership book. So when I heard about Leading at the Edge, I was interested but skeptical. I was prepared to advise readers to read instead Lansing's book or the more recent The Endurance: Shackleton's Legendary Antarctic Expedition, by Caroline Alexander.
I was pleasantly surprised. Perkins' book is sort of a leadership study guide, using incidents from Shackleton's expedition. For example, the chapter on mastering conflict discusses the importance of engaging dissidents and points to expedition photographer Frank Hurley, who was something of a troublemaker when not included in decisions. So Shackleton made Hurley a member of his inner circle--even though he didn't value Hurley's advice as much as that of some of the others.
If applying a polar expedition to your own situation seems too much of a stretch, the book also includes four case studies of companies that have dealt with their own "edge" situations. -Abbie Lundberg AND...
The IT Consultant: A Commonsense Framework for Managing the Client Relationship By Rick Freedman Jossey-Bass/Pfeiffer, 2000, $39.95 Does an IT executive's technical competency guarantee that he or she can successfully deliver strategic IT services? No, argues Rick Freedman, IT trainer and consultant. The real make-or-break IT management skills, he says, are those related to human communication and interaction. This comprehensive and well- written text is for anyone who would like to acquire or brush up on IT management skills. -Carol Zarrow CIO BEST-SELLER LIST 5. Digital Capital: Harnessing the Power of Business Webs by Don Tapscott, David Ticoll and Alex Lowy Harvard Business School Press 4. Who Moved My Cheese?: An Amazing Way to Deal with Change in Your Work and in Your Life by Spencer Johnson The Putnam Publishing Group, 1998 3.Irrational Exuberance by Robert J. Shiller Princeton University Press, 2000 2. The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell Little, Brown and Co., 2000 1. The Leap: A Memoir of Love and Madness in the Internet Gold Rush by Tom Ashbrook Houghton Mifflin Co., 2000 SOURCE: May 2000 data, compiled by Words Worth Books, Cambridge, Mass.
WHAT THEY'RE READING Paul Rials, CIO, Dentsply International, York, Pa. Net Future: The 7 Cybertrends That Will Drive Your Business, Create New Wealth and Define Your Future, by Chuck Martin (McGraw-Hill, 1998) "Its strength is its ability to look at current trends and extrapolate their impact on the future."
Brian Light, CIO, Staples, Framingham, Mass. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, by Clayton M. Christensen (Harvard Business School Press, 1997) "It makes management aware that asking customers what they want is not enough. I liked it so much I gave a copy to Staples' CEO to read."
Tell us what you're reading and why at firstname.lastname@example.org. Visit the Reading Room at www.cio.com/books.
RESEARCH THAT'S REALLY DEEP By Karen Witham Lynch Science Applications International Corp. (SAIC), a research and engineering company headquartered in San Diego, recently donated information technology and engineering equipment worth $1.67 million to the Woods Hole Oceanographic Institution (WHOI), in Woods Hole, Mass., a private, nonprofit corporation dedicated to ocean science research and education.
A third-party assessor determined that impressive dollar value, but the real value to Woods Hole researchers is that the donated shipboard technology permits onsite analysis of seafloor sediment to detect chemical contamination.
Researchers can send the equipment, attached to a 20,000-foot cable, down to the ocean floor, where it grabs a scoopful of sediment, instantly analyzes its chemical composition and then moves on, ready to process another section. Since analysis takes place on site, fewer sediment samples have to be analyzed in shore-based laboratories, resulting in savings of time and money to marine monitoring programs.
The technology was developed primarily at SAIC's Newport, R.I., location, whose proximity to Woods Hole has led to a relationship between the two organizations' scientists. "We have a long-standing research relationship with Woods Hole," says Joe Daniele, senior vice president of intellectual property and technology commercialization at SAIC. "Due to changing market conditions, this technology no longer fits our business plans; but rather than just put it aside, we asked ourselves, "Why not donate it to someone who could further develop it?' "And the deal has created satisfaction all around: WHOI has newly acquired technology, and SAIC has a recently realized tax break.
HOT TOPIC SUPPLY-CHAIN MANAGEMENT LET'S GET...VERTICAL? By Derek Slater Business-to-business exchanges have the potential to slash costs out of the supply chain and nobody is more excited about that than venture capitalists. In fact, Boston-based AMR Research estimates that 600 such exchanges have sprouted up within just a year and a half as VCs look to cash in on the trend.
As in any overpopulated space, only the strong will survive, while the weak will eventually be either trampled or eaten. And one of the deciding factors in separating the fit from the faint will be whether buyers, who are supposed to use these exchanges to source new and inexpensive suppliers, decide to go vertical or horizontal. Vertical exchanges, such as CheMatch.com and Commerx's PlasticsNet, operate in a single industry, whereas horizontal exchanges like SupplierMarket.com try to attract a broader spectrum of participants across multiple industries. In SupplierMarket.com's case, the business is simply "parts," whether those parts are of plastic, metal, wood, plaster or some other material.
Vertical markets--or at least the good ones--offer industry expertise as their key selling point. They can build their trading infrastructures and services on the idiosyncratic needs of whichever industry they serve. Horizontal exchanges are unlikely to provide the same depth of expertise, since they handle multiple kinds of materials. That breadth may, however, provide buyers with a countervailing advantage. "What [buyers] are really trying to do is get efficiency from the exchange and reduce cycle times," says Murali Menon, vice president of engineering for SupplierMarket.com, in Burlington, Mass. "We're capturing a larger percentage of [what we need on] a typical project," he says of his company's horizontal approach. In other words, not only does a buyer that's building office parks or battleships need steel, but it also needs plastic, glass and other materials, and sourcing all those different products through a horizontal exchange can simplify its purchasing activities.
Some exchanges within each model will likely survive. However, it's worth noting that among AMR Research's list of the 40 strongest exchanges, the vast majority are at least beginning life as verticals.