Talking the Talk

FRAMINGHAM (08/02/2000) - A long time ago, in a galaxy far, far away...company executives understood their world and their place within it. With their fingers on the pulse of their companies, they knew what to watch out for. They knew their competitors. They could navigate the roads of their industries, potholes included.

Then things changed. Something new emerged. It was called technology, and it arrived in an odd vessel full of strange words and bewildering acronyms. It confused even the brightest people. Just when they thought they had the beast by the tail, the beast shifted, changed colors and escaped again.

And if that weren't enough, technology began to follow the executives home from the office. It sat down to dinner with them and their families. Executives were assaulted with technology advertisements and news reports about companies whose products they didn't understand. A suspicious thought began to sneak into their heads: Technology would begin to play a critical role in every facet of company decision making.

Does this tale ring true? If it does, you're not alone. But there's good news:

Only a small percentage of people actually know what they're talking about when it comes to the ins and outs of technology. The bad news is that many of them report to you.

With that in mind, Darwin has put together this IT primer that aims to ground you in some of the moment's key IT topics. It's light enough, we hope, to make the dreaded subject interesting, yet it's substantive enough to help you ask intelligent questions of your CIO. So sit back. Put your feet up. And let us help you.

WHAT IS CRM, AND WHERE CAN I BUY SOME?

The premise of customer relationship management (CRM) is simple in a "why didn't I think of that" sort of way. Make customers happy once, and they will come back. Make them happy a second time, and they will come back again. Make them happy...well, you get the point. But despite what many CRM software vendors would have unsuspecting potential buyers believe, CRM is not a technology. It's a business strategy that means taking a long-term view of the customer in order to build the kind of relationship that sticks. By focusing on the customer relationship as a whole rather than on specific transactions, CRM proponents believe that companies can make their most valuable customers even more valuable.

For example, an auto repair shop might notify Sally when it's time for an oil change, hoping that she will return when her timing belt starts to go. A bank might keep a careful eye on a customer's life events--a new job, a marriage, kids--and send offers for appropriate financial services. Similarly, companies might begin to lavish less attention on less profitable customers to increase the resources they have for profitable ones.

But despite its rise to buzzword status, CRM isn't completely new. Customers have always been around, and so have the methods of keeping track of them. Data warehousing and contact software, which manage customer contact information, have both played important roles in CRM's development.

Great, you think. Sign me up. Well, we have a couple of caveats. If a vendor tells you or your CIO that his company offers a complete CRM solution, look carefully to see if his nose is growing. CRM isn't something you can buy off the shelf, plug in, and stand back and watch in action. You can buy parts of it, like software that lets salespeople automate how they record and track customer contacts or call center technology that allows customer service reps to view a caller's order history and offer specific products based on established preferences. But only by linking these technologies with business processes can CRM really work for you, and only by integrating front-office systems like sales and customer service with back-office systems like finance and manufacturing can you reap the promised benefits. And that ain't always easy.

A key part of CRM's success is the premise that sharing customer information across departments makes for a better relationship between the company and the customer. But not everybody likes to share. Joe in sales, for example, might be used to having his own relationships with customers--built on years of interaction and many long dinners on the company tab. Convincing Joe that it's better in the long run if he gives up that information to Melinda in shipping may not be easy. But companies that learn how to use CRM the right way will have an advantage, especially in a wired world that makes it easy for customers to shed their loyalty.

DIDN'T AN ASP KILL CLEOPATRA? THEN I DON'T WANT ONE, DO I?

Well, yes and maybe. Outsourcing, or paying someone else to do work that you don't have the time or resources to do yourself, is nothing new in the world of IT. It's been more than a decade since Eastman Kodak inked the first major IT outsourcing deal, forking over US$250 million to outsource its data center operations.

But over the past few years outsourcing has morphed into something new: application service providers (ASPs). And companies billing themselves as such are cropping up faster than crab grass in July.

The premise is easy enough. Instead of buying an expensive application or system that will end up costing hundreds of thousands of dollars, ASPs offer businesses the opportunity to "rent" applications or systems, whereby the company pays a monthly fee and signs over control to the ASP. Companies generally access the application over the Internet. So if you want an enterprise resource planning system but don't want to shell out the bucks, an ASP will host the system for you. And like a good party host, it takes care of all the details: implementation, trouble-shooting, maintenance and upgrades.

ASPs make sense in a lot of ways, which is why they've been garnering more than their share of media hype. And why not? Many a modern business and service runs on a similar premise. Most people who pump iron would rather pay $50 a month to the local gym than buy all those weights and lug them to the basement.

Because signing up for an ASP requires little or no technical expertise, the model means that businesspeople can shop for applications they previously could only get from their IS departments. That's good news for many on the business side: the pleasure of high-tech applications without the pain of understanding how they work. At the same time, it makes their already murky relationship with the IS department even murkier by introducing the issue of control and accountability into transactions that formerly remained staunchly in the IS domain.

But relationships aside, renting applications and accessing them over the Internet forces companies to turn notions of security and privacy on their heads: Signing up for an ASP means handing over crucial, and often very private, company data to outsiders. An ASP agreement requires a new degree of trust, and not everybody is willing to grant it.

I'M FEELING INSECURE ABOUT MY NETWORK. HOW DO I KNOW IT'S SAFE TO GO INTO THE WATER?

Network security is quickly becoming one of the trickiest areas of managing a company's IT resources. It's always been a less-than-ideal situation to have outsiders gain access to private company data. But the advent of the Internet and the proliferation of e-commerce websites means that no company with an Internet presence is immune from potential security breaches.

The name pretty much says it all: Network security is the way your company keeps its important data in the right hands, letting the good people in and keeping the bad people out. But the people in charge of network security--sometimes it's the CIO, sometimes a security officer--have a two-headed beast to wrestle, because network security is somewhat of a paradox.

On one hand, the more secure your network is, the less susceptible it is to outside intrusion. At the same time, the tighter the security gets, the more difficult it is for users to access what they need. Face it, nobody wants to remember six passwords just to access e-mail and surf the Web.

These days, the keys to keeping networks secure come in a few different guises.

Perhaps the most common is the firewall, which is a combination of hardware and software that monitors traffic between networks and the Internet. Think of it as a very good baby-sitter that will let little Johnny watch The Little Mermaid but send out an alert when he reaches for the Rambo tape.

Encryption scrambles information that is sent electronically. So when a customer at Talbots.com types in her Visa number, the site's encryption ensures that even if some enterprising teenager with a modem and a spare afternoon does intercept it, he won't be able to read it.

There's also authentication, which checks that people accessing the network are really who they say they are. And an emerging area of network security is intrusion detection systems, whose goal is to thwart hackers using a combination of firewall technology and the ability to test and immediately repair security breaches. Still another part of network security can involve Internet monitoring, which ensures that employees aren't accessing sites that could land the company in legal hot water.

Some vendors offer security suites that bundle one or more of these solutions and claim to make your network completely secure. Be wary of these. The fact remains that no network is really 100 percent secure from outside attacks.

Internal threats can also spell trouble. Network security breaches can leak from the most unassuming places, like employees who leave their passwords scribbled on Post-its on their computers. And on a more threatening level, danger can come in the guise of disgruntled former employees who are willing to disseminate security informa-tion for money or revenge.

Security costs are part of doing business these days, like paying the building management fee so that the bathrooms remain stocked with toilet paper. But this isn't the place to cut corners. Cheap toilet paper could leave workers a little rough around the edges, but cheap security could bring your company down.

I KEEP HEARING ABOUT THESE VERTICAL MARKETPLACES. WHAT CAN I BUY THERE, AND SHOULD I BRING MY OWN SHOPPING BAG?

That depends on whom you listen to. If the predictions of many analysts are to be believed, businesses that don't join a vertical marketplace, and now, are going to be on the outside looking in, noses stuck to the glass. Vertical marketplaces--a.k.a. B2B exchanges--are online communities in specific industries that bring together buyers and sellers over the Web to meet, converse and exchange goods and services through outlets like online auctions and catalog sales.

Their appeal to buyers is strong; purchasers can compare prices from a variety of sellers quickly and easily, and step outside of their usual supply chains for good deals. Sellers can reach new accounts and offload excess inventories regardless of geographic constraint. And both parties benefit from the savings, eliminating costly paper processing, phone calls, faxes and trips that have been a part of selling since long before Willy Loman took his wares on the road.

Many of the vertical marketplaces now operating online are third-party sites, which means that an outsider brings together buyers and sellers and profits from the union. VerticalNet, for example, made its name--and a lot of its pre-IPO employees rich--by opening up a site filled with vertical communities like manufacturing, food service and health care. Nearly every industry can find some sort of third-party marketplace on the Web. Need to get rid of 200 gallons of crude oil or 60,000 chickens in Tennessee? There may be someone in Timbuktu who wants to buy them.

The models for vertical marketplaces vary. In some, buyers pay for the transactions. More commonly, sellers pay. In others, everyone pays to be part of the community and to access the information. Experts are predicting that trillions of dollars will change hands in the next few years through B2B exchanges.

Recently, established players have decided that they'd rather build their own marketplaces than join one of the third-party sites that are glutting the Web.

Sears decided to join with French retailer Carrefour to create a global exchange for the retail industry. And the Big Three automakers have announced plans to form a similar alliance--cutting out the middlemen who claim to cut out the middlemen.

Part of what's intriguing about the onslaught of vertical marketplaces is that they represent a change in the way many industries operate, shifting the balance of power from seller to buyer, forcing sellers to be competitive and opening up a no-holds-barred method of communication between the two. At the same time, they offer new opportunities for geographically disadvantaged buyers or sellers.

That's all the more reason to see what's going on in your industry. Suppliers on the sidelines are likely to get undersold by suppliers who can cut costs by doing business online. Buyers could miss out on key offerings. And experts predict that once the novelty of business-to-consumer sites has worn off--and according to Wall Street, it's wearing quickly--vertical marketplaces will remain standing. But not everyone agrees. The models are still clunky, and despite the millions of venture capital being poured into these sites, they have yet to live up to their promise.

ARE ARCHITECTURE AND INFRASTRUCTURE THE SAME THING?

Picture a brain-damaged spider trying to weave a delicate, silky masterpiece.

Now visualize a CIO attempting to make sense of his company's computer architecture. Not a pretty sight. Computer architecture refers to the blueprint of a computer system, including the system's layout and how the processing workload and application logic are distributed. It defines standards ensuring that hardware and software from different vendors will work together and that data can be shared across different platforms. Most large companies have a number of incompatible systems that have been carefully integrated over the years.

By contrast, infrastructure consists of the physical components of the computing architecture--wiring, routers, switches, middleware, operating systems, servers and sometimes desktop PCs. Most of this stuff is invisible to you. However, when your computer freezes or your network goes down, it doesn't seem so invisible anymore. Next time that happens, at least you'll know to scream, "You gosh-darn infrastructure!" before you sneak out to play a quick nine holes.

I THOUGHT MAINFRAMES WERE DEAD. WHO REVIVED THEM? AND WHY?

A mainframe is a large computer that handles business transactions. First introduced in the 1950s, mainframes became ubiquitous over the next four decades and can be found in the data centers of most large enterprises. While today's average PC contains exponentially more computational oomph than any of the early mainframes, the breed has kept pace, packing many millions of instructions per second into a shrinking package.

Mainframes play host to and process large amounts of data--they are workhorses, plowing the fields with nary a whinny, but are dismissed as unsexy by some technophiles because of their ancient bloodline. Mainframes are usually connected to thousands of dumb terminals. The essential attribute of a mainframe is that processing is undistributed--the stereotypical view is that of a huge server enclosed in a glass house guarded by an elite team of IS staff with a street-gang attitude that says, "Data is power, and this is our turf."

Sometime in the late 1980s, a technology called client/server computing threatened to displace the mainframe. In the client/server model, processing power is distributed flexibly across networks of interconnected workstations and servers, with client PCs taking on many functions formerly centralized on mainframes. This frees the mainframe to handle specialized tasks such as security and database management. At the same time, client/server end users gain something long denied them: real-time access to the "live" (meaning most current and relevant) enterprise information.

Many technologists believed that client/server would eventually render the mainframe useless, a doddering dinosaur of an early Technozoic Era. However, implementing client/server in large enterprises turned out to be fraught with difficulty, complexity and high cost. And mainframes came to be seen as possessing persistently valuable legacy data and applications. So instead of going away, they continue to play a useful role in a multitiered computing architecture. CIOs continue to buy these behemoths because they are reliable and secure. Client/server, the trendy infrastructure of the 1990s, remains popular, especially in today's Web-connected environment, though technologists no longer believe it will solve Russia's debt crisis or improve Jim Nabors' record sales.

WHY DOES MY DATA NEED ITS OWN WAREHOUSE? AND CAN I MINE IT WITH ONE OF THOSE HATS WITH THE LIGHTS IN THE FRONT?

Having trouble visualizing a data warehouse? Think of 12 fraternity brothers stuffing themselves inside a Volkswagen Beetle. Each frat boy represents reams of company data. The Beetle is the warehouse. The dashboard represents the...oh, never mind.

One of the more hyped technology solutions in recent years, data warehouses have become de rigueur in many large companies. A warehouse is a database that holds large amounts of historical business data in one place. The wonderful thing about warehouses is that they collect data from across the enterprise and make it easily accessible for analysis. For example, a retailer might collect a customer's demographic information, purchases, returns and credit card usage.

Data like this can help businesses improve customer service and explore new business opportunities.

Data mining uses automated tools to extract data from a warehouse to analyze patterns, trends and relationships. By mining, companies aim to refine large clots of data into useful information. A credit card company, for example, analyzed two years' worth of customer payment data and discovered that reducing minimum payment requirements for customers consistently near their credit limits increased their average balances, which generated more interest revenue for the company. Some banks use mining tools to determine how customers will react to interest rate adjustments.

Not all data warehouse projects succeed, however. Many an expensive project hits the skids because of a lack of partnership between business managers and IS, unclear business objectives and metrics, and a failure to comprehend the enormous investment needed in people and resources. And a bevy of data mining tools on the market means that companies must do their homework to make sure they're purchasing the right tools.

What else about IT is confusing you? Let Senior Writer Meg Mitchell (mmitchell@darwinmag.com) or Senior Editor Todd Datz (tdatz@darwinmag.com) know.

OPERATING INSTRUCTIONS

Operating System An operating system runs all the programs on a computer by taking care of the input and output, and tracking files and directories.

Unix A family of operating systems first developed in 1969 at AT&T's Bell Labs. It's difficult to learn, but portable, flexible and powerful enough that it has become the OS of choice for many enterprises.

Linux A version of Unix that is distributed freely. It's reliable and secure but not as robust as other versions of Unix. Nevertheless, many companies are starting to trust it for mission-critical applications.

Windows 2000 The most advanced version of Microsoft's Windows operating system, which is trying to overtake Unix as the operating system of choice. It has a graphical interface that makes it easier to use than Unix but may lag behind in terms of reliability and scalability.

CONSUMER ACRONYMS

MP3 An audio compression format that lets users download sound files, such as music, onto their computers in a short time without taking up all the room on the hard drive.

PCS (personal communications service) Combining three different technologies, this advanced network architecture provides wirelessnetworking mobility. A PCS phone can connect to a PC for wireless networking.

PDA (personal digital assistant) A handheld device that functions in several capacities: as a cell phone, fax sender and personal organizer, among other things. PDAs use a stylus, or pen, rather than a keyboard.

OPERATOR ASSISTANCE The 411 on telecommunications talk Bandwidth The amount of data a network can transport in a given period of time. Higher bandwidth means more data per second can be transferred.

Broadband A network that provides very high bandwidth.

Convergence Bringing together different technologies into one device. For example, accessing the Internet over a cell phone or making phone calls through a PC.

DSL (digital subscriber lines) Transmits data over copper wires at a much greater speed than regular phone wires. DSL works only when the user is close to one of the telephone company's central offices.

Ethernet A LAN standard used in many organizations.

ISDN (integrated services digital network) International communications standard for transmitting voice, video and data over existing telephone lines.

ISDN uses digital technology that allows data to be transmitted much faster than standard phone lines.

LAN (local area network) A communications network that connects users within a single location, such as in an office.

TCP/IP (transmission control protocol/Internet protocol) This is one of the core standards of the Net and makes it possible to communicate among all sorts of computers.

Voice over IP Voice transmission over the Internet rather than phone lines.

The quality is generally not as good as phone transmission, but it's much cheaper.

WAN (wide area network) A communications network that connects widely separate locations. Think of WANs as the interstate highways and LANs as the secondary roads connecting them.

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