The new computer.

Is the Internet killing the local area network?

The computer as we know it may soon go the way of the columnar pad. And if it goes, it may take with it much of the traditional application software we use to write reports, crunch numbers and perform database functions. It may even antiquate the software and the hardware for local area networks (LANs).

What's behind all this?

The Internet.

What started as a slow, clumsy communication tool for researchers and the military has become a communication superhighway for anyone with a telephone and a computer. And now, with the development of some unique software and the growing use of highspeed phone lines--integrated services digital network (ISDN), which can handle considerably more data than ordinary analog phone lines--the Internet may revolutionize how we work with computers.

The impact of all this?

Surely it will affect all computer users--including the sole CPA practitioner as well as all the accountants in the finance department of a Fortune 500 company.

THE DAYS ARE NUMBERED

Before you rip out your network cables, junk your new Pentium computer and toss out your copies of WordPerfect and Lotus, be aware that not everyone agrees that the days of today's computer are numbered. And even those who do concede its end is inevitable are reluctant to put a date on this computer Armageddon.

To understand the significance of all this, some background is necessary: Whether you're working in a small or a large office, it's likely that your computers are networked-- linked by wire or came so that each machine can communicate with all the others on the network. And, depending on the size or technical status of your organization, all your application programs (such as your word processor or spreadsheet) and the data they generate are stored either on the hard disk inside your computer or on a central, remote computer, called a "server." The server literally- serves up the application or the data you need to work, and the LAN system transports them through its maze of cables to your desktop.

Enter the Internet, which is analogous to a LAN, except it runs on phone lines, not special LAN cables, and its reach is worldwide--extending to all of the millions of computers linked to the Internet.

Thus, even if your office is not expensively wired for a LAN, you can exchange files with a colleague down the hall as long as both of you are connected to the Internet. Ditto with a colleague in Tokyo, London or Nashville. Admittedly, for most users Internet data transmission is a bit slow, since information must flow through conventional phone lines using a relatively out-of-date analog design. But with the new' high-speed digital phone systems and modems, data zip along at least four times faster. And some of the compression techniques for packing the data in tighter bundles effectively increase the speed even more. As a result, many users--especially businesses--appreciate the economies of high data-transmission speeds and are converting to ISDN.

How practical is it to use the Internet for intracompany communications? Levi Strauss & Co., the jeans maker, thinks the Internet provides a snug fit for its needs. It is installing modem links so its 10,000 employees worldwide eventually will be able to exchange information electronically: Such private linkups are called intranets--as opposed to Internet. Steve Levandowski, a computer specialist at Levi Strauss, says the company has no current plans to transmit sensitive financial data on its intranet because the Net still isn't secure enough. In the meantime, he adds, the network is being used for general communications--mostly by the marketing and sales staff. The finance department will be wired in later this year.

Other intranets are sprouting at Lockheed Martin, the aerospace company, and at Merrill Lynch & Co., the brokerage house, to name a few;

THE ECONOMICS

A typical LAN connection costs nearly $1,000 per workstation; that includes the software licenses and the cable and connection hardware. And if a user wishes to add Lotus Notes to enhance data sharing and communications among users, add at least another $150 per user. On the other hand, an Internet connection needs only a modem (which costs less than $200) and Internet access (which costs as little as $9.95 per month).

To be sure, a plain vanilla intranet connection is not as sophisticated as a LAN and Notes setup. But in reality, few workers need such advanced system to do their jobs adequately.

While it's clear that files can be shared over the Internet, is it really possible to also share application software?

Hard as it is to believe, the answer is yes. The technical development that could make all this possible is a computer operating system called Java, developed by Sun Microsystems and Netscape. What makes Java unique is that it's a multilinguist. For example, if a word processor or spreadsheet program is written in Java, that application can run in a variety of computers--whether they run on Windows, Macintosh or Unix. That's not possible with applications written in any other operating system. In effect, then, Java could be the universal computer language.

Another unique property,' of Java is that it's portable and adjustable. Those two words need some explaining. If you want to write a report with your present word processor, you click on the application and the entire program, megabytes of computer instructional code--either stored on your computer's hard disk or on your organization's server--springs into service. The entire application comes to life, so to speak--even though you may need only 10% of the instructions; in other words, 90% of the program, although stored on your computer, is not being used.

Now, if a tiny section of Java software (let's call it an "applet") that contains just enough instructions to run the part of the word processor that you need to write the report-- and no more--was imbedded in a file, you could write the report; and once you finished, that applet would effectively disappear. Thus, the applet is usable only in that file.

Take another step: If that file was transmitted to you via the Internet, you wouldn't even need the whole word processor program on your hard disk. Both the file and the application to run the file would be delivered apiece--the makings of a computer and software revolution, and another reason why LANs may be an endangered species.

Most software developers recognize the threat--if not the potential--of Java, and they are hurrying to find ways to deal with it. Likewise, they are seeking new ways to use the Internet. In fact, in the next year expect to see a flood of what are called Web-enabled and Internet-ready versions of applications software. Even Microsoft, which has a vested interest in requiring users to store software on their personal hard drives--as opposed to sharing it--is joining the Internet move. However, rather than making its software sharable over the Net, it's promising the next version of its Office suite (which includes Word, Excel, PowerPoint and SchedulePlus) will add Internet-access features. In addition, it has licensed Java--although it is unclear how it will apply the program to its own products. Lotus also promises to make its Notes program Web-enabled.

Assuming the changes being forecast here come to fruition, how will this affect the accounting community?

The first obvious changes will be the slow demise of the LAN as we know it. While current installations probably will remain, new users increasingly will make some price-capabilities comparisons before opting for a LAN network. And while the conventional LAN wins hands down now for most applications and data sharing, in the years to come the balance may swing to the Internet as the technology of choice.

THE COMING DINOSAUR

In addition, if the Internet becomes the byway for sharing both data and applications, the current high-power computer will become a dinosaur.

If all this comes to pass, what will the computer of tomorrow look like? To begin with, it will be lean--little or no hard disk storage and probably costing about $500. Several companies--including Oracle, the fast-growing database software developer--have already announced such a computer.

And finally, computer users will no longer be slaves to the applications software they invested in and loaded on their hard disks. Several schemes are envisioned. The most likely one is that users will effectively rent an application, paying only for the time it's actually used. Such a system could work like electric and gas utilities. The applications will be stored at the utility--available for rental on demand.

What all this adds up to is: The future ain't what it used to be, and the only thing that's assured is change.

EXECUTIVE SUMMARY

* THE COMPUTER AS WE know it may soon go the way of the colunmar pad, although there is controversy about the date and extent of this technological Armageddon. If it goes, it may take with it much of the traditional application software we use to write reports, crunch numbers and perform database functions. It may even make obsolete the software and the hardware for local area networks (LANs).

* THE INTERNET IS THE REASON for this possible change. With high-speed phone lines, it's conceivable that all data and application software could be stored on the Internet and called up on demand.

* HOW PRACTICAL IS IT TO use the Internet for intracompany communications? Levi Strauss & Co., the jeans maker, is installing Internet links so its 10,000 worldwide employees can electronically exchange data with each other. Such private linkups are called intranets-as opposed to Internet.

* NEW TECHNOLOGY ON THE drawing board will make sharing software easier. The technical development that is making all this possible is a program called Java, an operating system that can handle any application-no matter what system it was designed for.

STANLEY ZAROWIN is a senior editor on the Journal. Mr. Zarowin is an employee of the American Institute of CPAs and his views, as expressed in this article, do not necessarily reflect the views of the AICPA. Official positions are determined through certain specific committee procedures, due process and deliberation.