The Net: need or weed?

At the risk of sounding like one of those experts who warned Columbus the world is flat, I pose this question: Are companies too passionately embracing some of the latest business technologies, like electronic mail and the Internet?

Before you snap back, get this straight - I'm not computerphobic. I have a computer on my desk. I even use it for more than just writing memos. And I make sure every employee in my department is comfortable with computers. (Believe it or not, some even enjoy reading computer magazines.) Indeed, I owe much of our recent success to the ability of these men and women to develop computer applications that do truly innovative things.

But all of the hoopla over e-mail and "the net" still doesn't compute with me. For example, the Electronic Messaging Association puts the total, worldwide value of e-mail to business users at $12.7 billion (basing the figure primarily on the savings associated with sending a message across the street or across the country at the same price). But $13 billion seems awfully high to me. If we were saving that much, wouldn't it be reflected in billions saved in phone bills, overnight-mail charges, postage or something?

THE BOUQUETS

Of course, after talking with several people who work at firms that use e-mail, I found they've got some very good things to say about it. Like there's no better way to disseminate information to a large audience quickly and cost efficiently. It reduces the need for conference calls and provides a written record of assignments, action plans and so forth. "I thought you said you were going to file that report." "No, I didn't, and I've got a written record to prove it."

I agree that e-mail can be a great resource when it's time to do personnel evaluations, too, because so much of what an employee has accomplished has been recorded. For instance, Lotus Development Corp. uses e-mail to eliminate human-resources paperwork. When hiring, the HR team obtains authorizations from the appropriate managers through e-mail. The company also makes HR information, like summary benefit plans, available through e-mail. It's great for transferring files, and it beats the hell out of a fax machine.

Another fixture in many businesses, the Internet offers a humongous, ever-expanding library with an extremely smart and efficient librarian at your command. And, unlike visiting the library, you don't have to worry about chance encounters behind the short stacks with some geek who wants to discuss Avogadro's Law.

The Internet also hosts user groups I can join to help me do my job better. For example, I can chat with a group discussing the hot issues in government contracting. Uh, no thanks. I think I'll watch reruns of Al Gore explaining how NAFTA works. And, if that doesn't excite me, I can join a user group discussing, say, my favorite football team, the Dallas Cowboys. Fantastic! Now I see how I can use the Internet in my daily life.

So what's not to like about the new technologies?

THE THORNS

Well, there are some definite downsides. As many people know, confidentiality and security are real issues. Roughly three-quarters of Fortune 1000 companies responding to a Michigan State University study believe theft or attempted theft by computer of customer information, trade secrets and new product plans has increased over the past five years. There are at least partial solutions to this problem, like data encryption and firewalls, but they cost money, and the protection isn't perfect.

Another downside to e-mail: Because it reduces human interaction, it may also reduce the normal civility that occurs when most people discuss problems face to face. It's a lot easier to write a memo telling someone he's a jerk than it is to say it to his face. Look at newspaper columnists. I wonder how many would have the nerve to say to people what they write about them so freely. Tempering one's comments and searching for common ground, in an effort to just get along, isn't a bad thing.

What about the possibility of fouled-up communications? A friend told me about a seriously botched communication at his firm when the word "atypical" instead of "a typical" made its way into a message. To be fair, that's not a typical occurrence. The more likely communication problem comes with the loss of inflection and expression. For instance, in rebutting an asinine comment from an uninformed colleague, just how powerful is your message if you can't roll your eyes or cast a look of disbelief at the stupidity of the comment?

And don't discount the fact that responding to e-mail can become such an all-encompassing task that employees lose sight of their real jobs. One middle manager at a major communications company swears his employees sometimes receive 50 to 60 messages a day. That may be extreme, but according to statistics, many people do deal with dozens of e-mail messages daily, and often only a few of the communications are relevant to their jobs. What's more, sometimes they're just ridiculous. "Hey, can you make a meeting tomorrow at 3?" "Not sure, I'll e-mail you." "Either that or you can get off your lazy butt, walk 10 yards down the hall and just tell me. I'll write it down, by hand, on my calendar. The whole process will take 30 seconds."

I'm convinced two of the biggest disadvantages to the Internet are the price and the opportunity it gives employees to goof off. I think it's fair to ask how the network will increase revenues or profits in your organization before you spend huge sums of money on it. You might check to see if the people pushing an increased commitment to the Internet are the employees whose division is shrinking or the one that's growing so fast the group needs new office space. If it's the latter, then joining the Internet probably makes sense. If it's the former, proceed with caution.

You can get access to the Internet very cheaply. But, once you're connected, it can cost a lot to use, depending on things like security, the number of users and processing speed. Ask yourself this question: How will I improve my bottom line if my employees get information from the Internet at the rate of 4 kazillion gigabytes per second or 1 jillion gigabytes per second? Frankly, I don't see people working that frantically to get things done.

This obsession with linking to the Internet, with the most up-to-date technology, reminds me of program managers who consistently complain about the information they receive from accounting. "If only the financial reports would talk to us and tell us what to do, then we could manage." "Hey, if they could do that, why would we need you?" When our employees who do manage within their budgets, regardless of the format, start complaining, I listen closely to them. But when it's a program manager who always overruns projections, I don't listen so much.

A potentially bigger cost, of course, is associated with employees who do something other than work while they're on the Internet. Anyone who thinks employees won't spend somewhere between a little and a lot of time "surfin' the net" is being incredibly naive. How many times have you walked into someone's office and watched him quickly clear the screen because he's playing with something not related to work? "Bob, if you're working on your resume, your title is staff accountant, not senior financial analyst. And just because you processed Creighton's expense report for his trip to France doesn't mean you manage our international investment portfolio. And, by the way, what's the status of that project I gave you last week?" "Oh, my machine went down and I lost my data, and after I entered it again I ran into a snag with the spreadsheet. I've just about got it worked out and should have the material to you tomorrow." Moral of the story: Monitoring someone who's working on the Internet isn't easy - unless he happens to be a Cowboys fan, too, and you run into him in cyberspace on Monday morning discussing Sunday's game.

EXPECT INSPECTIONS

Of course, you could argue the telephone also offers a great deal of potential for abuse, and no one's suggesting we stop giving employees access to their own phones. However, I'd counter by pointing out that, while everyone has access to a phone, most companies do block calls to 900 numbers. It took just one month's worth of calls to LaToya Jackson's Psychic Hot Line before I got wise. (By the way, a lot of the stuff she predicts does come true.) Furthermore, many companies require employees to use personal codes when calling long distance and then review the bills to see if anything looks funny. I'm reminded of what my last boss told me, "People will do what you inspect, not what you expect."

My company, like many high-tech outfits, uses both e-mail and the Internet. But, as you might guess, because I don't think all of the costs associated with an Internet connection make sense at this time for our department, we don't use it yet. Nonetheless, we get financials out by the first or second working day of each month and have a lengthy list of accomplishments at the end of each fiscal year. It's amazing what you can do with an abacus, a big, green accounting pad, a bunch of really sharp pencils and visors to help you stay focused on the numbers.

We don't use e-mail in the finance and administration department either - at least not yet. Security and confidentiality are big concerns to me. When I hear the reasons for using e-mail, they usually include stuff like, "I hate walking down to Gerald's office to give him a memo." It's not obvious to me how e-mail will make our operation run more smoothly, except for transferring files and disseminating certain HR information that goes to all employees. Consequently, we plan to set up one workstation dedicated to that function.

Having said that, I do recognize that one day in the not too distant future our entire department will be equipped with e-mail like the rest of the company. It's inevitable. At that point, I'll instruct my staff to use it only when it's more efficient than other forms of communication - in other words, when it makes good business sense. I'm sure the Internet is in our future as well, particularly since we do so much benefit administration inhouse and that area seems to be able to make use of the network.

I guess the most important lesson from all of this is to not lose sight of what your organization is trying to accomplish and to figure out how new technology will help you do that cost efficiently. But play hardball - don't acquire the technology just to say you're on the cutting edge.

Mr. Falconi is CFO of a defense contractor in northern Virginia.