IT strategy - Internecine wars

A great paradox of the Internet boom is starting to emerge. The Net has been hijacked by the IT industry. Yet the Internet world and that of IT and telecommunications vendors are run on entirely different premises, and this is leading to a conflict that will dwarf the standards wars of the past. The conflict extends into the user community too.

To be truly useful to business, the Net needs to be controlled, secure and restricted.

But the Internet is all about freedom. Unlimited access to information, seamless links to anyone possessing a PC, a modem and a low-cost service provider account. This freedom has given the Net much of its value as compared to other methods of online communication, trading and information sourcing. Yet the anarchy is also deeply frightening, and many parties are seeking to constrain the Net. Only then, the debate goes, can it really fulfil its potential as a tool for new business models and an engineer of social change-without a downside that will cancel out many of the potential benefits.

The downsides most commonly raised include unlimited access to pornography, especially by children, and the ability for criminals and terrorists to communicate. The public debate on these issues has culminated in the past few weeks in political and legal manoeuvrings at the highest level of US and European Union administrations.

From a business point of view, the most threatening aspect of the Net is usually cited as security. More generally, it is hard to devise a business model that runs on a system to which access is largely uncontrolled.

So the Internet needs to be reduced to a manageable structure that fits into business IT thinking. Intranets have been the most significant step so far, harnessing the low cost of Internet communications for internal corporate transactions, while building a wall to keep out the outside world.

Security mechanisms, too, are improving and next year should see credit card transactions finally becoming relatively safe.

Such changes may be a far cry from the original free and easy, anti-commercial culture of the Net. But they were both inevitable, once businesses realised what a powerful tool was lying in wait behind their PC screens, and should bring genuine benefits to companies round the world.

December’s Internet World show in New York demonstrated how far the Net industry has come in a couple of short years in addressing the perceived downside of freedom, for business managers. All the talk was of Internet commerce, with new products emerging from every corner and queues of users boasting of their experiences in trading on the Net. In fact, Net-based purchasing is still a tiny proportion of world trade, and most companies are still using their Web sites primarily for marketing, but this is the first year that the idea of Net commerce has taken a prominent place in the IT plans of major corporations. The dissenting voices are few at the moment-although likely to increase as early enthusiasts face their inevitable disappointments. The third largest US bank, Citicorp, recently denounced Internet trading as “unsafe”- and its larger rival Citibank’s loss of millions of dollars to an Internet hack has been well publicised but most of their fellow banks are apparently confident that the anarchy has been sufficiently tamed to make cybertrading a viable option.

The rise of Internet trading makes the whole world of the Net even more attractive to the IT vendors. To them, the downside of the Net’s freedom is more pronounced than for the users. On the one hand, the Internet is challenging many of the ways that the IT and telecoms industries traditionally make money. It can be accessed from consumer devices such as televisions, potentially reducing the demand for PCs. Companies like Netscape pioneered a model of delivering free software over the Net, and the whole dynamics of software pricing have altered in consequence. Low-cost Internet connections are biting into the revenues of telecoms operators and online services such as Compuserve.

The solution is for the IT industry to take control of the Net. Oracle and Sun have set the pattern. Oracle, with its network computing architecture concept, quickly grasped the fact that Web-based operations require huge servers. Sun, for its part, has produced Java, THE programming language and operating environment of the Net, and rejuvenated a business that was also threatened by the PC boom.

One thing has not changed about the IT vendors – they want control, and they will get it by locking companies into their technology. Sun, Oracle and Netscape have been very self-righteous in condemning the virtual monopoly of the Wintel combination, Microsoft’s knack for making proprietary technology a de facto standard. Yet they are doing just the same thing. Oracle, not content with gaining account control via the database and associated tools, is now designing an operating system of its own to rival NT. The greatest danger of Java, say many observers, is that licensees will develop slightly different specifications that will become incompatible. The old Unix saga – where every supplier had a different version that it was constantly trying to impose as a standard – is likely to be repeated.

It is no coincidence that IT vendors such as Netscape and IBM have formed a group to lobby governments worldwide to stay out of the Net. They know that the Net is their future, and the more it is left free from government regulations, the greater chance they will have of dominating it.

Caroline Gabriel is a group editor in VNU’s IT portfolio.