The final countdown

The final day of the seminar, March 30 2004, featured a panel debate on the theme Where is the Internet going and what will the killer applications for retailing, banking, and customer service be?. On the panel were Susan Duggan of the Silicon Valley World Internet Center, Paul Oh of Sun Microsystems, and Philip Gordon from Haas School of Business. The discussion was led by Peder Inge Furseth from the Norwegian School of Management BI.


The panel made some short introductory remarks first:
Susan Duggan, Chief Executive Officer, World Internet Center
The Silicon Valley World Internet Center provides a platform for exchange of strategic knowledge in the Silicon Valley. They do think-tank exercises where companies, gurus and entrepreneurs meet to discuss challenges and future technologies, as well as public sessions with more general themes such as “what are the hot issues in the Valley?” (Which turned out to be the challenge of dealing with the incredible amount of data that is being generated). Important issues their clients are looking at are RFID and sensor network technologies (smart dust), homeland security (the developments in this area will eventually find its way to consumers as well), and funding difficulties and increased bureaucracy (they are trying to lower barriers to get funding for advanced research.) Corporate performance management, both financial and human resource, is important (Hyperion is an interesting company here). At a recent discussion of the “next big thing”, top of the list was collaborama” – collaborative systems based on multiplayer gaming. Connectivity remains an issue, as does security, a problem that is getting worse as the complexity is increasing.
Paul Oh, Chief Customer Officer, Business Intelligence and Data Warehousing, Sun Microsystems
Paul presented Sun and how the company in 1996 had made three big bets: Internet (as dominant distribution platform), Java (distributed language), bandwidth (continuing increase in capacity at lower prices). One of the surprises they had found was that Java turned out to be an enterprise language, not for doing graphics on small devices. A key challenge among many for their clients was the complexity of the desktop and the challenge to the dominant tehcnology by Open Source software such as Linux, Mozilla and the Star Office suite.
Philip Gordon, Haas School of Business, UC Berkeley
Philip started out by saying he wanted to provide a dash of cold water in the face. The search for the killer application is a waste of time – like looking for BigFoot. You won’t know it when you find it anyway – and it is business that should drive technology, not the other way around. Instead, look for a killer business process or model, and then make it real through technology.
Where is the Internet going? I don’t think it is going anywhere, it is what it will be. It is a channel – not quite yet mature, but the way it looks and operate now is like the real world, and that will continue. Offers lower cost customer service, the ability to know your customers by transaction and interaction, and a chance to extend your reach. The Internet needs to be integrated across and into your business and organization.
Discussion session
Rather than an open Q&A session, the participants spent time in groups generating three questions they asked the panel to address:
Q1: RFID: How ready is this in terms of timing, cost, what are the challenges?
Duggan: The technology is there, and the business systems are there for the large retailers. This will happen, but the price is still at about 10 cents/tag. Standards will work out – currently, there is a big argument between EPC vs. IPv6. One big discussion is what will happen with China, whether they will establish their own standard, but the consensus seems to be that China will come along. Outside retail, health care is a very interesting area for the technology, but the privacy issues and the data analysis hasn’t been worked out yet.
Gordon: RFID over the next three years will be used in shipping and at the case and pallet level, because of privacy issues. There are still some technical issues with the readers, some retailers are finding that cases of liquid impede the signal, but that will be fixed. Walmart and the DoD (Department of Defense) are moving their suppliers to this. It will take 3-7 years to work out the privacy issues for RFID at individual item level. Retailers will have to move to tracking along the supply chain, have to decide how to do that.
Oh: No technical reason for this not to happen immediately. Sun is opening an RFID center in Dallas to work with suppliers to DoD and Walmart. Data challenge: Amazon generates one terabyte data per week, clickstreams and so on, 99% of which is worthless, but you don’t know what is worthless until 3 months later.
Q2: How do you gain competitive advantage from the core assets in banking: customer relationships (transaction information, customer information, trust)
Oh: This is obviously a big issue for many of our customers. What we find, from a systems vendor perspective, is that many customers don’t really have an architecture to have personalization at the customer interface (ATM or phone, especially). Need multi-tier architecture, need thin client, must have that in place before you can start to capitalize on the many applications and data.
Gordon: Trust is something you earn, you don’t get it from projecting an image of trust. You get it from the customer telling you what they want – and delivering it. So do that!
Duggan: Mobility is increasingly important – to have access to your account, download money, make payment from your handheld is the future in the US. Key challenge is in how to implement this from a systems view.
Oh: These are issues that come up not just in banking. You see it in other systems as well, such as directory integration. Do you, for instance, have a common repository of business rules for your call center?
Q3: Integration in today’s businesses: What are key performance indicators be to secure integration, what measurements should we use? Corporate performance management – how does it fit in?
Gordon: Profit. No matter what line of business you are in, that’s what it comes down to. People use a lot of other measurements, because executive compensation is based on it, or EPS or productivity. Saw a company once that used 50 metrics – how can you find that many things to measure? I think you should do it simple – use a spreadsheet – or a calculator! However, everyone in the company needs to know what is important – you must publish that.
Duggan: Many new measures, centered around financial capital, intellectual capital, customer capital (cost of servicing, for instance), and organizational capital (such as what Fedex has). ICgrowth.com is an interesting company here.
Oh: Big issue in the US with Sarbanes-Oxley (the new law about corporate governance, following the collapse of Enron), CEOs and CFOs have to sign off on a number of statements of accounts. Many companies have executive dashboards that make the Key Performance Indicators visible and available.

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