CXO's: Hold your own in a blizzard of buzzwords! Simulate a depth of knowledge that others can only pretend to possess!Reader ROI Read this article to learn - Some of the major IT issues facing executives today - Definitions of technology terms - How to impress your CIO at the next IS steering committee meeting Life's been pretty darn good to you. Every morning you wake up, tighten the knot on your Armani tie, kiss your family goodbye and pull out of the driveway in your gleaming new Mercedes. Off you head to your job at a multimillion-dollar company, which, thanks in part to your stellar contributions, has achieved four straight years of record-breaking growth and profit. Your assistant hands you the day's schedule as you stride into your spacious office, steaming cup of cappuccino in hand. "I deserve to be here", you think, as you wheel your chair around to gaze out at the world from your 30th-floor window. There is nothing that surprises or intimidates you, even in today's predatory world of global business. You reign as an All-Knowing Oz in a World of Cowardly Lions, a honcho fit for the 21st century. As your computer screen flickers on, there's only one thing that will slow you down as you get set to begin another kick-ass day. You can't remember how to access your e-mail. Face it CXOs -- technology ain't your strong suit. Yet today technology plays a critical role in every facet of company decision making, whether it be improving customer service or making a manufacturing line more efficient. With that in mind, this primer aims to ground you in some of the key IT topics of the moment. It's light enough, we hope, to make the dreaded subject interesting; yet it's substantive enough that you can ask intelligent questions of your CIO without those questions becoming fodder for CXO jokes at the next IS department keg party.
"I thought mainframes were dead. What happened?" A mainframe is a large computer that handles business transactions. The name derives from its size and processing power. First introduced in the 1950s, mainframes became ubiquitous over the next four decades and can be found in the data centres of most, if not all, 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 more millions of instructions per second into a shrinking package. Mainframes play host to and process large amounts of data -- they are workhorses, ploughing the fields with nary a whinny, but they are dismissed as unsexy by some technophiles due to 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 centralised on mainframes. This frees the mainframe to handle specialised 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 multi-tiered 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 sales of John Laws' book of poetry.
"What's the latest buzz on e-commerce?"
You've read about it, you've sat through gee-whiz presentations about it, and CIOs better damn well have big plans for it, right? Well, yeah, probably.
Electronic commerce (or e-commerce), fuelled by the growth of the Internet, is restructuring industry value chains and may ultimately have as big an impact on the conduct of business as electric power or the assembly line. Today e-commerce encompasses the full value chain -- basically, anything that involves transaction-based interenterprise or customer-facing technology could fall under the e-commerce mantle. It includes using technology to achieve a sale, Web-based marketing and sales, electronic data interchange (EDI), customer and product databases, electronic catalogues, ATM networks and electronic payment systems. Businesses are using the Web to wring every efficiency they can out of their relationships with suppliers, factories and distributors, reducing the time it takes to design products, fulfil orders and track sales and inventory.
Business-to-business purchasing over the Web is more than a blip on corporate radar: BusinessWeek reported that by 2000, General Electric expects to be buying $US5 billion of supplies online. And business-to-consumer commerce has taken off like an F-17 -- goods and services sold over the Net to North American households topped $US8 billion in 1998, according to Forrester Research. Other estimates put e-commerce to reach 510 million customers worldwide by 2003, so the potential consumer revenue streams are enormous.
While it's hard to make sense of the hugely inflated market capitalisation's of online companies like Amazon.com and E-bay, many regard their stock performances as a future vote of confidence for online commerce. Security remains an important issue, however. Firewalls (software and/or hardware that provides security by isolating a company's computer network from the rest of the Internet) and encryption technologies help keep hackers at bay. And John and Jane Doe's much-discussed fear of entering credit card numbers online is rapidly diminishing -- Internet sales during last year's holiday season more than tripled those of 1997, suggesting that convenience has supplanted anxiety.
Before investing big-time in e-commerce initiatives, however, executives must wrestle with questions of cost and ROI. Companies may need to focus on the long-term value of e-commerce rather than on the hefty upfront costs, which can cause heavy sweating and trembling speech in board meetings.
"Are architecture and infrastructure the same thing?" Picture a brain-damaged spider trying to weave a delicate, silky masterpiece.
Now, visualise a CIO attempting to make sense of his or her company's computer architecture. Not a pretty sight. Computer architecture refers to the blueprint of a computer system, including both the layout of the system 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. The causes of this incompatibility have included a lack of standards and a bunch of vendors maintaining their advantage by pushing systems that claim to be based on standards but sometimes play fast and loose with them. 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 gollydarn infrastructure!" before you sneak out to play a quick 18 holes.
"I acknowledge my lack of knowledge about knowledge management. Please help." If you believe the hype, knowledge management (KM) will do everything from vaulting your company to the top of the Fortune 500 to removing those pesky grape juice stains from your tie. Knowledge management describes the efforts by organisations to find, collect and organise the intellectual capital -- knowledge -- of their companies. Employees are encouraged to share their knowledge and use the knowledge of others, both inside and outside the organisation, to help themselves and further company goals. The payoff for companies includes improved project coordination, better teamwork and closer customer relationships.
All KM efforts begin with content of various kinds that might have value to others: best practices gleaned from a recent project, a conversation with a peer at a conference, your company's HR manual and so on. The information could reside on a corporate intranet or in a database accessed using groupware (specialised software, such as Lotus Notes, that supports collaboration and communication among groups). Some companies even have chief knowledge officers (CKOs) at the helm of their KM efforts (though these folks often stand on the fringes at business conferences to avoid having to explain their titles). So now you understand all the fuss, and you've just told yourself you'll sign a blank check to the next KM consultant who walks through your door. But before you do, take a deep breath. While many companies claim to have significant knowledge sharing going on, with reams of data in their Notes databases to prove it, the reality is their employees may never use it. This is because they may not know it's there or because the database is a disorderly dumpster for informational bric-a-brac. Similarly, workers may be reluctant to share the knowledge in their brains and on their desktops with others -- after all, knowledge is power, and the impulse to hoard rather than share is strong. The key ingredient to successful KM, therefore, is not some off-the-shelf technology sold by teams of eager consultants promising the moon but delivering only a satellite or two. Rather real KM -- getting, refining and sharing information across the business -- requires enormous organisational change.
Only companies willing to remake their cultures around the value of sharing information and insight will receive the much-touted but rarely delivered benefits.
"Internet, intranet, extranet -- what the heck is the difference?" Less and less, as it turns out. When businesses fell head over heels in love with the Internet, Web sites began popping up like crocuses after a spring rain. "We are here!" they seemed to shout. "And aren't we wonderful?" In these early spasms of creation, outward-facing Internet sites and inward-facing intranets were reared by distinctly different parents -- siblings separated not merely at birth but well before it. Marketing and corporate communication groups took custody of everything that looked out upon (and was accessible by) the world (Internet sites); IT departments and (sometimes) corporate librarians took custody of the intranets, which aimed at being information repositories and process-streamliners. In those early, willy-nilly efforts hardly a thought was given to enterprise Web strategy. The possibility that an intranet might have interlocking interests with an Internet site seemed remote (after all, they were kept apart by that forbidding mechanism, the firewall).
Ultimately, a third sibling came along: the precocious and highly sociable extranet. Through the mediating auspices of extranets, the barriers separating the siblings have become less distinct than before. Because of its interenterprise nature, an extranet often brings partners in through the firewall and enables their interaction with internal business processes.
Likewise, an extranet can draw upon the resources of Internet sites. So creating and sustaining this extroverted third sibling can require coordination across multiple enterprise functions and activities. As a result, business enterprises now recognise the need for a coordinated, overarching strategy that artfully unifies (or at least acknowledges the interrelationship of) these three Web resources -- each of which increasingly draws upon the power of back-end legacy systems and business processes. (For a more in-depth look at Web strategies, see "The Insider's Guide to E-Commerce", page 74.)"Hey, what's the deal with network computers?"Network computers (NCs) are PCs minus a hard or floppy drive, which means software applications and files cannot be stored locally. Instead, applications reside on a server. Think of the server as a giant vending machine, a pack of M&Ms as an application and yourself as an NC in dire need of a sugar fix. If, on the other hand, you were a PC, you could swallow a dollar coin and self-dispense those red, green, orange, brown and yellow tabs. Unlike PCs, NCs cannot run by themselves; they depend on a network. Bottom line: PCs are more powerful than NCs. NC vendors tout -- and CIOs are entranced by -- the stripped-down computers as cheaper alternatives to PCs, which generally cost more per unit and are expensive and cumbersome to maintain. NCs are easier to administer, meaning fewer frantic calls to the help desk from Jones in finance when he loads a home-grown accounting program onto his PC. Simplified software upgrades are another benefit. However, NCs do not come baggage-free. They require higher network-related costs, reducing the savings. They aren't suited to users who need a lot of processing power nor to remote users (sending data back and forth between a server and a laptop is messy). And just try telling the executives in your company that you're replacing their PCs with IS-controlled boxes -- taking away their desktop power may not be a smart career move.
Most companies are currently sitting on the sidelines, waiting for the battle among competing vendors -- Microsoft, Sun and Oracle, to name a few -- to play out before deciding whether to buy NCs. At the moment, there is no clear standard nor is there a clear winner. And to confuse things further, vendors offer NCs with PC characteristics and PCs that are dumbed down. Few companies that buy NCs will completely replace their PCs. Instead, NCs may become popular for certain applications, such as call centres, reservations and order entries.
PCs will continue to rule the roost in companies for the time being. Solitaire anyone? "I hear a lot about data warehousing and data mining. What are the benefits? Are there any drawbacks?" Having trouble visualising a data warehouse? Think of 12 university students stuffing themselves inside a Volkswagen Beetle. Each student represents reams of company data. The Beetle is the warehouse. The console 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 in order to analyse patterns, trends and relationships. By mining, companies aim to refine large clots of data into useful information. A credit card company, for example, analysed two years 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. 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.
"Why does it take so long to install an application on our network?" Or to rephrase the question from an executive's point of view: "Why the #!&$ does it take so #!&$ long to install an application on our #!&$ network?!" The answer lies in a word: integration. Integration involves making computer applications that were never meant to talk with each other as conversant as Steve and Tracey on weekday mornings. Why all these mismatched applications? Traditionally, each function within an organisation had its own system; there was little need to cross-link information among systems. Today, as barriers between functions continue to dissolve, companies are increasingly sharing data enterprisewide -- a bank's marketing department wants customer information from finance for a new campaign, a hospital needs patient data stored in different systems in different locations. However, because there have been relatively few standard platforms over the years, those creative IS folks need to write new software programs and use all sorts of gizmos, such as bridges and gateways -- think sticky tape and chewing gum -- to allow applications to work together.
If you're starting to think that all this layering of pears upon apples upon oranges seems a bit tricky, you're right. In fact, integration remains one of the major IT challenges facing companies today. Businesses can't afford to throw out old systems and they can't get everything they need from off-the-shelf applications. So the challenge is to integrate in the simplest, most efficient way possible, which is kind of a long oxymoron.
To deal with this chaotic swirl, some IS departments employ single-solution providers, internal integration teams and enterprise resource planning (ERP) products that integrate all a company's functional processes with one software package. These efforts buffer the screams but don't solve the nightmares. So if you're wondering why your company's new e-mail package took six months to install, blame it on #!&$ integration.
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