Q&A: Internet Business Opportunities in the Post-Dot-Com Era

REDMOND, Wash., Jan. 14, 2003 — The burst of the dot-com bubble created widespread economic uncertainty, which also left many people wondering whether the Internet’s potential as a key business technology had been wildly exaggerated. According to Don Tapscott, an international best-selling author and expert on business strategy and organizational transformation, belief in the power of the Internet was never wrong, only misplaced. Instead of building Web sites to attract eyeballs, companies should have been using the Internet to build deeper relationships with customers and partners by communicating and collaborating in new ways.

Don Tapscott, author and business strategist

David Kiker, general manager, Microsoft E-Business Servers

As the Internet quickly evolves from a publishing medium to a programmable platform for distributed computing, it is changing the way companies do business and creating a dazzling array of new opportunities. But knowing the best way to use this powerful technology to seize those opportunities isn’t always easy. To help its customers and partners evaluate their own opportunities, Microsoft is sponsoring a series of seminars and Web casts that feature Tapscott, who advises top executives and government leaders worldwide about emerging business trends and long-term technology strategies.

PressPass recently spoke with Don Tapscott , author of “Digital Capital: Harnessing the Power of Business Webs,” and with David Kiker , general manager for e-business servers at Microsoft, about the role of the Internet in today’s dynamic business environment. Kiker and the Internet business team at Microsoft are focused on providing software that enables organizations to communicate quickly and cost-effectively via the Internet with their customers, partners and employees.

PressPass: How did the rise and fall of the dot-coms change the way companies view the Internet as a potential business tool?

Tapscott: A cartoon of two panhandlers on a busy street corner sums up the confusion of the dot-com boom and bust. One panhandler holds a sign that says, “Will work for food,” and he’s being ignored; the other holds a sign that says, “Will work for food.com,” and he’s being showered with money. There was a get-rich-quick mentality during the dot-com era, as though all you had to do was set up a Web site or start a dot-com, and riches would come your way.

Many of the dot-coms lacked viable business strategies and viable value propositions for customers, but this period was cathartic in helping us understand what the Internet is not about. Unfortunately, it left a lot of companies wondering what the Internet really means for business and confused about which way to turn.

There is a real danger that people will decide to throw out the Internet baby with the dot-com bath water. A lot of smart people are wondering whether the Internet is really important after all, or just another technology. They believe traditional thinking is not only necessary, but also sufficient to move us forward. This is a big mistake, and punishment is proving to be very swift for companies that fall into this trap. We’re not at the end of the Internet revolution; we’re at the very beginning.

Kiker : We’re starting to see companies thinking strategically about the Internet again, and thinking specifically about the Internet as a channel for communicating and building relationships with their customers, partners and employees.

The e-business server team at Microsoft is focused specifically on helping customers use the Web as a means to do exactly this. The Web is really about making connections. It allows companies and people to reach out much farther and much more easily than ever before. We’ve recently made announcements about some very big and strategic investments that we’re making at Microsoft. One such project, my team’s project, known as “Jupiter”, is focused specifically on enabling this broad reach of connections at a fraction of the effort required in the past.

PressPass: So businesses models are evolving to take advantage of the Internet to build relationships with customers, partners and employees, but technology never stands still. Isn’t the Internet changing, too?

Tapscott: Absolutely. When we think of the Internet today, we think of a network of networks that we access through a desktop PC. That’s about to change. The PC will continue to be important, but the Internet is quickly becoming the “Hypernet.” The number and nature of devices is changing dramatically. There are now hundreds of millions, soon billions, eventually trillions of inert objects in our world that are becoming smart, communicating devices — Internet appliances with IP addresses.

There is a vast proliferation of new devices as our world becomes smarter and more connected. Naturally, this is leading to an explosion in the number of users as well. Half a billion today, going to a couple of billion over the next few years.

Kiker: People are starting to use cell phones and Pocket PCs that have some level of connectivity to the Web. Take for example Emery Forwarding, a leading global transportation company, who is using Windows-powered Pocket PCs with Microsoft BizTalk Server to enable a wireless infrastructure between their cargo trucks and warehouses within their supply chain. But most customer-related transactions are still happening through a traditional browser. As bandwidth increases and mobile devices mature, however, you’ll see more people relying on these wireless mobile devices for all of their online interactions.

That’s going to change the way people build Web sites. For example, someone going onto an e-commerce site through a browser today has a very different experience than someone using a PocketPC. The site is very visual and personalized, so it’s easy to find information. Someone going there from a Pocket PC, which has more limited bandwidth and a smaller screen, may have a different experience. If the e-commerce company tries to cram the same amount of information on a small screen, the customer will get a poor experience, the relationship is damaged, and they may just go somewhere else.

Tapscott: And along with the explosion of new devices and new users, there’s also an explosion in bandwidth. The capacity of companies to communicate with customers, suppliers and employees is moving from a three-foot-wide garden path to a mile-wide information highway. Even that doesn’t tell the whole story, because this mile-wide highway is digital, so you can also stack cars on top of each other. Naturally, all of these changes — greater mobility and bandwidth, along with many more users and devices — also lead to massive growth in security requirements.

PressPass: What about the role of security in this new relationship-model for Internet business?

Kiker: Every good relationship is based on trust, so Microsoft has an important role to play in helping its customers establish trust-based relationships with their customers. We’re doing that in two ways.

First, Microsoft has made a huge investment in security for all of our products — and security continues to be our number one priority — so you can be confident in assuring your customers and partners that the deeper relationships you’re trying to establish with them are well supported by Microsoft technology.

Early in 2002, the entire e-business development team stopped writing code for weeks to focus exclusively on software security. I’m not talking about the basic security features that all companies need to implement. Those are a given. Our developers went through the actual code and redesigned it to prevent anyone from hacking into the code through a back door. The real areas of exposure are typically in the areas that most development managers or IT managers don’t even think about. Those are the areas where Microsoft is most heavily invested. Online security is a big issue for a lot of people — consumers and businesses alike — so knowing that the technology underlying your business is extremely secure is a key component for success in this new relationship-based model for Internet business.

Second, Microsoft helps to facilitate trust-based relationships on the Internet by integrating our products to make it easy for companies to interact more frequently, intimately and transparently with their customers and partners.

PressPass: Why is that important?

Tapscott : Relationships are quickly becoming a new form of wealth, a new form of capital. They behave like other assets in some ways — you can build them, manage them, perhaps even monetize them — but they also behave differently than other assets. For example, most assets depreciate the more you use them, whereas relationships seem to appreciate the more you use them. The more you develop relationships, the more valuable they become.

So we have to think about the architecting of relationships, and the technologies that enable companies to build those relationships, as being central to competitive advantage and business strategy.

Kiker : Microsoft’s Internet business team is focused on looking at the problems that our customers are trying to solve in terms of communicating better with their customers, partners and employees. Our job is to build software that will help them foster those relationships as quickly and cost-effectively as possible.

We found that a lot of content management systems weren’t being used because they were built for developers and the interfaces were too abstract for business users. In Content Management Server 2002, the interface is Microsoft Office. Business users can now create content, tag it, and publish it onto the Web using Microsoft Word. That change creates a direct link between a company’s business users and its customers.

We’ve integrated the capabilities of our server products directly into Microsoft .NET development tools, which allowed us to leverage Visual Studio .NET and the .NET Framework. Developers who want to build a new content management solution for their Web site can rapidly assemble that solution in Visual Studio .NET rather than writing hundreds or thousands of lines of code to get it built and deployed.

The latest versions of our server products have all been Web-services enabled. Applications built on top of these servers can easily be wrapped with standard XML Web services. As a result, they can interoperate in a heterogeneous environment, be exposed to partners to help build closer relationships, and integrate data systems between partners much more easily and cost-effectively than in the past.

In speaking with our customers, we quickly discovered that most companies didn’t want to implement a content management system unless they also had the ability to use analytics and personalize content. They wanted to analyze what was happening on the Web site and use that data to target specific content to their users. As a result, we now provide tight integration between Content Management Server and Commerce Server. That’s only one example of how Microsoft has devoted engineering and development resources to bring multiple products closer together and help our customers build relationships, rather than just building a Web site and getting it deployed.

PressPass: What does the future hold?

Tapscott : It’s becoming clear that this new decade and the new century are bringing about a new business environment. It’s also becoming clear that traditional business fundamentals, while necessary, will be insufficient as a strategy in this new environment.

There is a new metabolism in business. Companies need to be agile. They need to innovate, to create new and differentiated products and services. Companies need to build closer relationships with customers and partners, and be able to execute on business strategies. In this new environment, strategy is the easy part. It’s really about execution, about making things happen in a very complex and volatile world. This is a time of great peril for companies, but it’s also a time of great opportunity.

Kiker : Our customers can be assured that Microsoft will continue to provide e-business tools to help build the agile enterprise. Although some of the dot-com promises didn’t come through, many of our customers view the Web as an important medium for developing the relationships that are important to their business. We remain committed to helping them transform the way they communicate, connecting customers, partners and employees to information, knowledge and business processes. Indeed, there are many opportunities that lie ahead for enterprises in the coming years and we are very privileged and excited to be a part of it.

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