Learning to love the Internet.

If you're like most CEOs, you're probably sick of hearing about the Internet, which has been touted everywhere you turn as just about the best thing since sliced bread. If you are, it's not surprising. After all, as far as the actual business case for implementing Internet-related solutions goes, most of the coverage of cyberspace reads like hype. Nonetheless, as the number of technology start-ups grows exponentially, littering the information superhighway with a veritable traffic jam of shiny new products, it is becoming that much more critical for CEOs to see through the smokescreen of Internet hype and understand the business potential, as well as the very real limits, of the Internet.

The Net, in its various forms, does offer a fair and growing number of applied business benefits, including cost savings realized from the Internet's vast public networks versus high-priced leased communications lines; the ability to provide a greater number of lower-cost, value-added services to customers because of those savings; the opportunity to reach a global audience of millions, anytime, any place, with virtually any message; 24 x 7 accessibility to corporate documents and e-mail; the ability to support an increasingly mobile work force; the tools to harness vast stores of data to enhance sales and marketing strategies; and the ability to support business-to-business payments and other transactions. And the list goes on. But before any benefits can be realized, you and your CIO and other interested parties must understand specifically which technologies make a good fit for specific business needs, and which technologies best fit which processes, particularly when it comes to electronic commerce. "You can't be running a company today that's selling retail without understanding the strategic impact of electronic commerce on the Web," says Michael Sanchez, CEO of Malvern, PA-based Sanchez Computer Associates, who cites a Price Waterhouse study predicting that by 2000, 40 percent of all transactions will be done over the Internet. "So if you're not thinking about doing something to establish the infrastructure to support that, where will you be in 2005?" To that end, it's most useful to start with a look at the evolutionary process that brought the Internet to your desktop.

Genesis

In the beginning, there was chaos in the office: paper files in mystic arrangements, forgotten facsimiles fading to yellow in dusty drawers, business partners demanding face-to-face meetings from Australia to Zimbabwe. Existing communications and information retrieval and management systems simply weren't fast enough or effective enough to keep up with the ever-changing business world. Mountains of data and potentially precious competitive material went unprocessed, unrefined, and virtually unused. As a result, individual office sites were islands unto themselves, not connected to headquarters or to each other in any meaningful way. This made true collaboration among the various arms of the work force difficult, if not impossible. The solution, some observers realized, was in low-cost networking via computers. And such a system did exist - cloistered in the world of scholastic and government research.

In the early 1960s, the Department of Defense created the Defense Advanced Research Project Agency (DARPA) to work on methods of sharing information among distant locations. DARPA's plan was to devise a way to break each message up into little pieces - or data packets - send the pieces along different routes to the same place, and then reassemble the pieces to read the message.

You might think of it as a caravan of cars; since the cars can move independently of one another, they can move more efficiently on the highway. One car can take a shortcut, but if that turns out to be too crowded, another car behind it can spin off and take an alternate route. Each takes the most convenient and efficient path, but in the end, they all wind up in the same place.

In 1969, this technology, known as "packet switching," was used to link four large mini-computers at separate West Coast universities - and DARPAnet was formed. Gradually, this small network became popular as an open academic forum, rather than just a governmental resource, and this created more crowded paths, which, in turn, increased demand for improvements and expansion. That ultimately came in the form of a new system - or language-for handling the transfer of these packets. The new language, called Transmission Control Protocol and Internet Protocol (TCP/IP), was developed by Robert Kahn - one of the designers of DARPAnet and now president of the Corporation for National Research Initiatives - and Vinton Cerf, now a senior vice president of Internet architecture and engineering at MCI Communications, who had worked closely on the original DARPAnet protocol.

After 10 years of ironing out the details and experimenting with protocol variations, Kahn and Cerf introduced TCP/IP in January 1983, enabling different models of computers to communicate with each other across multiple platforms. Once TCP/IP was widely accepted, DARPAnet became the broadly accessible Internet. For years, the Internet remained primarily the province of academia because of the National Science Foundation Network's Acceptable Use Policy (AUP), which essentially forbade commercial use of the Internet. But that changed in 1991, when the Commercial Internet Exchange (CIX), a non-profit trade association, was founded, giving Internet customers the option to put their pan of the Internet to commercial use. Since then, virtually all of the Internet has been open to business.

The Sum of Its Parts

Today, the Internet ks a massive global communications network with almost no legal structure at all. Stripped to its basics, it can be visualized as millions of interconnected computers communicating via the TCP/IP protocol. By itself, this might not have meant much for business, but the availability of advanced clam warehousing technology has provided for more organized storage-and-retrieval systems for corporate data, a.s well as more productive manipulation and analysis of clam for rules, marketing, advertising, and other operations. Internet technology, then, enables your employees to access this data quickly and easily tram anywhere they may be, including the road, whether they are operating via public Internet connection or via private networks. An increasing number of financial institutions, for example, are setting up loan officers to take loan information, send it electronically to the central computer, and receive approval back to their laptops within minutes - reducing processing costs and improving customer service. Last year, for example, NationsBank's Dealer Financial Services unit - which targets the automotive financing market - adopted networking technology to link dealers and borrowers in real time from any location, cutting loan approval time to as little as five minutes.

In its current form, the Net comprises a number of pieces, each of which has different potential business uses. These include:

* The World Wide Web (www)

This subset of cyberspace uses a language called the Hypertext Transfer Protocol (HTTP) to send text, graphics, and multimedia. Web sites can be accessed by Web browsers such as Netscape Navigator and Microsoft Internet Explorer. A company can set up a site on the Web to increase brand awareness, sell products and services, create a more dynamic interactive relationship with customers, or give customers a place to offer feedback on the company's products and services. Given the millions of Web pages now on-line, most industry, analysts and think tanks, such as the Gartner Group and Forrester Research, agree that "billboard" Web sites, or sites that simply take written promotional material and transfer it to electronic form, offer little competitive advantage. But a focused, interactive, dynamic Web site will likely offer some new business potential over the next year and beyond, when electronic consumerism is expected to flourish. According to a recent Deloitte & Touche Consulting Group study, compared with last year, 50 percent more consumers expect to make purchases over the Internet within the next year.

* Usenet

The best way to understand Usenet is to picture a big compilation of electronic bulletin boards. Each Usenet "newsgroup" is a list of topically bound, interactive user messages stored on central servers. Users can log in to particular groups to view headings of messages posted, zoom in for more detail, and post replies. While newsgroups are perhaps better known for their recreational uses, there are literally hundreds of business-oriented groups out there that are remarkably specific in topic, and therefore make excellent research tools.

* Electronic mail

The explosive growth of e-mail - fueled by the increasing prevalence of home computers and on-line services like America Online and CompuServe - has revolutionized business communications as significantly as did the fax and FedEx. Using a specific protocol, or language, to send electronic messages between addresses via the Internet, e-mail is perhaps the simplest Internet application to deploy. Unlike older proprietary network messaging systems that could not communicate with each other unless they'd been specifically integrated for that purpose, e-mail uses broadly accepted communications standards that make it possible for almost anyone on any e-mail system from any computer to send messages to anyone else. This, in turn, is enabling corporations to accommodate an increasingly mobile work force less expensively.

For more sophisticated, collaborative, enterprise-wide messaging solutions, many companies are exploring groupware. Products like Lotus Domino/Notes offer a dynamic format for real-time conversation and document sharing. The Notes architecture allows for document replication, which means that when various employees make changes to documents, those changes are automatically synchronized across the enterprise. While groupware was, for some time, a proprietary, stand-alone architecture, the arrival of comparatively open, compatible, and hence, less expensive intranet technology (see page 26) has led to more integration between groupware and Internet technology.

Potholes on the Information Superhighway

As might be expected, taking information out of locked file drawers and placing it on networks raises a slew of new dangers that need to lye dealt with to protect your company's valuable information and ensure productivity. This message sounded loudly a year and a half ago when a group of Russian hackers was arrested for cracking Citibank's electronic money transfer system and, over a period of four months, attempting to transfer more than $10 million to various accounts around the world; the news undoubtedly struck fear in the hearts of IT and business managers across the globe. Fortunately, one bank's oversight served as an industry's lesson, and, as a result of this and other similar incidents, the issues to address are clear:

* Crackers. The most publicized rogue computer crimes, such as the Citibank fiasco, involve criminal hackers, or crackers, breaking into a corporate network to .seize or alter information or freeze operations (called a "denial-of-service" attack). To prevent this, your network should lye carefully safeguarded with firewalls. Like electric fences, firewalls stand perimeter guard around your major system and prevent any unwelcome guests from diving in by requiring user names and passwords for accel. For best protection, they should be placed at all points of access through whatever point an outside user could possibly dial into the network.

To further protect against "social engineering" - the process by which a hacker verbally cons or manipulates a legitimate user into divulging his or her password - companies are steadily moving to either double-password systems or token-based security, which means arming each mobile employee with a user name, alphanumeric password, and physical piece of hardware, like a smart card or a digital ID card, which identifies the user to the network. Automated teller machines use this system of identification; users need both their passwords and a magnetic bank card to gain access to the bank network.

* The Internal Rogue Expert. Crackers, however, are not a company's greatest threat. In fact, only a small portion of computer-related crimes reported by U.S. corporations are committed by an outside party. A far more significant threat is posed by current employees who steal or manipulate data for a host of different purposes. While this risk can never be completely eliminated, it can be lowered substantially by placing internal firewalls between departments or business units. Give your employees access only to what they absolutely need to do their jobs, rather than carte blanche access to the entire network. Security First Network Bank, for example, the nation's first virtual bank, makes use of a software program called HannaH, from SecureWare, which forces all users to identify themselves every time they enter any point of the network.

* The Disgruntled Employee. An equal danger is posed by former, perhaps terminated, employees, who might once have had access to corporate files and may still have current passwords. Frequent password changes will help prevent this, as will more dynamic, token-based security. Smith Barney, for example, arms its mobile employees with digital identification cards that are synchronized with the company's host computer. The digital ID changes every 60 seconds to correspond with the host. Other companies are working on perfecting biometric technology, which will use facial signatures or fingerprints stored on smart cards to identify individuals.

* The Great Time Waster. If the Internet has the potential to make workers more efficient (using the Web as a quick research tool, for example), it has at least as much potential for wasting time and reducing productivity (surfing the Web for baseball scores, for example). Management must have strict policies regarding the network, e-mail, and the Web, and apprise employees of the rules and the consequences for breaking them.

RELATED ARTICLE: THE GROWING INTERNET ECONOMY 

1996 - $14.8 BILLION

Internet Access 28% Infrastructure 27% Financial Services 2% Business-to-Business Electronic Commerce 4% Consumer Retail 4% Online Content 35%

2000 - $196 BILLION

Infrastructure 15% Internet Access 17% Financial Services 12% Online Content 19% Consumer Retail 4% Business-to-Business Electronic Commerce 33%

By the end of the decade, the total "Internet economy" will expand dramatically, according to Forrester Research. By the year 2000, 33 million U.S. homes will have Internet access - about three times today's number - and a third of all U.S. businesses will be connected to the Internet, up from about 10 percent. Forrester sees especially strong growth in financial services and in business-to-business electronic commerce, where more formal supplier relationships and a more sophisticated technological infrastructure lend themselves to buying and selling online.

Source: Forrester Research

RELATED ARTICLE: FIVE QUESTIONS TO ASK YOUR CIO

CEOs should be, and are, inquisitive by nature, says Chris Jesse, CEO of Raleigh, NC-based Tangram Enterprise Solutions, an enterprise management solutions company. This is primarily because they constantly have to educate themselves quickly on issues that may not be their field of expertise. Technology and the Internet are no different. "CEOs have to start asking questions about technology and the Internet the way they ask questions about secondary offerings, about shop-floor loading, product releases, cash management. They have to stop shying away from technology and just start asking the simple question: Why?"

1. What specific new information will we receive from this investment?

If your CIO is hankering for any kind of Internet, intranet, or extranet technologies, you'll want to ask specifically how the new system will help the company make more intelligent use of its information, rather than simply getting more information for the sake of having it.

2. How will this investment make my employees better at their jobs?

Specifically, not generally. If you're investing in a networking solution, an intranet, or groupware, find out why all the employees who will be on it will benefit. it's similar to asking to upgrade an entire division to the next level of Microsoft Excel; the CIO should prove how that will enable the users in that division to perform better, and not simply answer, "The next version is better, so it will necessarily lead to better quality or more efficient work."

3. Which division is driving the expenditure?

Often, requests for investments in new technology rise up to the CIO from a specific division or department head. If the bill is high enough, it's worth placing a call to that business executive and discussing the project.

4. Who will be affected by the change, and how long will they be drawn away from their primary jobs?

Depending on the size and the nature of the project, implementation can be a long, tedious process. Even when things go smoothly, you may learn a project is going to take workers away from their desks for three or four days. If the downtime is significant, you may want to postpone the investment until a time that conflicts less with the rhythm of your business.

5. How will the new system build on our present infrastructure ?

Whatever your internal design, chances are good that you've already made significant investments in technology, and it may be easier to justify expenses of a new project if you can leave alone some of what's in place.

VOCABULARY BUILDER

Every field has its own jargon, but the Internet outdoes itself when it comes to generating new terms and words. To really get the hang of the gab, you have to virtually live and breath Internet. For CEOs, however, the following words should be enough to help you keep up with your CIOs.

Browser - A software program that lets you access World Wide Web sites. The first was Mosaic. The most widely used today are Microsoft Internet Explorer and Netscape Navigator.

Content - The actual text, graphics, and sound that are placed on a Web site.

Cookies- The program some Web sites use to identify users and trace their activity, so you can track their interest in your company's on-line presentations. This information is commonly used for marketing and product research.

E-mail - The system used to send text, graphics, and files in virtually any format from any one computer to any other in the world. Commonly used e-mail programs are Eudora and Lotus ccMail.

Extranet - A secure network connection between two or more companies that link them together over the public Internet, enabling collaborative communication and sharing of information.

Firewall - Software and/or hardware that blocks unauthorized access to either your internal networks or your Web server. If a hacker locates a point of access on your network, a firewall should prevent the breach.

Internet - The public network of networks that binds together systems throughout the world using the TCP/IP protocol.

Intranet - A local network using Internet protocols and software programs, usually laid on top of a company's existing network structure.

Pull - Pull servers passively wait for users to request information from them. Most Web sites use pull technology.

Push- Push servers actively push unrequested information to your local browser. Today, this is commonly used in advertising and in newscasting.

Search Engine - A program on the Web that lets you search through the Internet for specific information. These engines, such as Alta Vista, Webcrawler, and Yahoo, are fast becoming the "Yellow Pages" for finding information on the Web (see page 18).

SET - Secure Electronic Transactions. A security protocol published by Visa and MasterCard to enable secure credit card transactions over the Internet.

SSL - Secure Sockets Layer. An open security protocol developed by Netscape Communications that enables Web servers and browsers to exchange financial and other secure information without fear of interception. This has been broadly supported by credit card companies and banks.

TCP/IP- The network protocol or agreed-upon method of communication that binds the Internet together; it is also the standard protocol for intranets and extranets.

Usenet - The superset of the Internet and other networks that use common e-mail and newsgroup protocols to communicate with each other.

Webmaster - A network administrator whose primary job is ensuring that a Web site runs correctly.