Setting A Good Example

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Setting A Good Example
As 'technology enablers,' computer vendors blaze a trail for users to follow

By Caryn Gillooly
Issue date: Sept. 18, 1995

omputer vendors practice what they preach. Their own internal systems, often on the cutting edge of technology, show the way for both customers and other indust ries. Their in-house networks often act as living labs for some of their newest technologies. Hewlett-Packard and IBM, for example, are experimenting with desktop videoconferencing while continuing their broad deployment of Lotus Notes collaborative computing software. Also, while just about every computer vendor has a home page on the Internet's World Wide Web, the leaders are breaking ground in using the Net to conduct business.

"The vendors are the technology enablers," says Arif Janjua, principal at the communications and electronics practice of EDS Corp.'s management consulting service in Santa Clara, Calif. "They're much better positioned to make use of these technologies."

At HP, more than 100,000 employees do their jobs over a single TCP/IP network using server-based personal productivity applications. They communicate via 150 voicemail systems that have been integrated. HP's sales force uses Lotus Notes on portable computers, updating records as often as necessary from the field. All these pi eces, particularly Notes, form an extremely collaborative working environment.

But that's yesterday's news. HP, according to Bob Walker, director of corporate information systems, will test its own desktop videoconferencing system to further improve collaboration. The company already uses video technology extensively, primarily for training. Employees gather in a conference room to receive a transmission and respond by voice or fax. With the new system, employees won't even have to get up from their desks.

Walker says HP is experimenting with desktop videoconferencing not necessarily because employees need it, but because HP engineers need to understand how it works and how it can be used. "Our role is not to be a showcase of technology, it's to use technology to gain a competitive advantage in the marketplace," Walker says. "Doing good, solid R&D is important. That's part of the culture of our company. We're willing to take the risks in understanding new technologies and where they fit in."

I BM is taking similar risks but is doing so by taking advantage of products from its own diverse divisions. The vendor plans to have 15,000 Notes users on its corporate network by next year. IBM also is evaluating desktop videoconferencing. "Ordinary videoconferencing would have happened anyway," says Jerry Prothro, chief information officer at IBM. "But we started to use desktop videoconferencing earlier than we would have if we hadn't had access to it through our own labs."

'Net' Profits
At Sun Microsystems in Mountain View, Calif., 14,000 employees use the global corporate network, not only for 325 critical applications, but also to listen to a biweekly radio show given by company CEO Scott McNealy. Bill Raduchel, CIO at Sun, says an increased emphasis on multimedia over the next three years will enhance that broadcast dramatically. "We run Sun [the company] on Sun [products] not as a marketing thing, but because that's how we learn--how we know what issues are important," Raduchel says. "T he only way to understand the real issues with technology is to use it."

Computer companies also are learning by experimenting with the Internet. "The computer vendors are in a unique position to use the World Wide Web and the Internet more than, say, the automotive industry," because it's their own business, says John Gantz, senior VP at International Data Corp., a research firm in Framingham, Mass.

Many computer vendors distribute products such as software upgrades over the Internet because their products are easily disseminated that way. Some provide online information about their goods, others conduct business, and still others combine the two by selling and delivering their products online.

"Companies using technology to communicate with their customers are creating the 'new customer connection,'" says Chris Leuchtenburg, director of computing strategy services at Forrester Research Inc. in Cambridge, Mass. Leuchtenburg estimates that nearly one-third of the traffic over the CompuServe networ k comes from vendor bulletin boards alone.

HP may be leading the way in electronic commerce. According to Walker, a large percentage of the sales derived from HP's reseller channel already come in via EDI (electronic data interchange)--a standard way to conduct business transactions over a network. The company also is exploring uses of the Web. "It's a good source for customers to gain information about our products and our company," Walker says.

He expects all forms of online transactions to increase dramatically at HP. "The next generation coming is a richer form of electronic commerce that has our systems merging more rapidly with suppliers and customers," Walker says. "We're experimenting so we can see what does and doesn't work on the Web."

IBM also has a home page on the Web, and the company plans to use the Internet for many product offerings. "In our view, the Internet will become close to the most acceptable way to get information," Prothro says. But it goes well beyond simple information - gathering. "I estimate that within a few years, 80% of hardware purchases will be done through electronic commerce," Prothro predicts. "The more intelligent buyer will go with electronic commerce."

Other computer industry leaders are taking a more conservative approach to online services. Digital Equipment, for example, while making strides in globalizing its own corporate network and providing connections for its more than 10,000 mobile employees, is concerned about the safety of its information.

"One of the issues we've had to look at is security--securing information within our own organization, office to office," says Digital CIO Dick Fishburn. "The next level will be making the Internet secure. The Net will certainly be an ideal way to pass product information back and forth and will serve as a vehicle for customers to come into our company. But as far as electronic commerce, there are still issues around security that are inhibiting that."

Sun, too, emphasizes security. Sun wants to improv e security so it can increase use of online services. As with desktop videoconferencing, where CIO Raduchel says the company can learn only by doing, Sun is trying to understand security mechanisms such as firewalls.

Sun is also working with hundreds of partners over public online networks and through its Web site. SunExpress, the company's marketing arm, even offers an online version of its product catalog.

Raduchel hopes to continue expanding Sun's online efforts. "Our networks have traditionally been castles--we've had guards and moats around the gates, but once inside, you were free to go anywhere you wanted," he says. "We're at the point now that the castles are still there, but a large city has developed around it."

Paying The Price
Using cutting-edge technology isn't cheap. Sun's annual information technology budget is about $183 million, HP's is more than $900 million, and IBM tops them all at $2.3 billion.

The big budgets seem to be justified. "There is a huge requir ement for after-sales support in the computer industry," notes Forrester's Leuchtenburg. "These vendors have created armies of people for support. This leads to the need for a huge database that customers and business partners can access through online services."

The vendors' investment in new technologies appears to be paying off. "Between strides in online connections, remote diagnostics, and call-handling, these vendors are down to the level of measuring the number of seconds it takes to route a support call," says IDC's Gantz.

Improving support levels is increasingly important. Analysts agree that as more computer products become commodities, the way vendors will have to differentiate themselves is through service and support. Not coincidentally, both collaborative computing and online access are two primary ways to enhance customer support.

"The human issues will be where you'll differentiate yourself, so the service skills will be the differentiating factor," says Digital CIO Fishburn. "It' s great to have the best technology, but it's important to use that technology to provide the best service and support."

(To view the Computers chart in PDF format click here)

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