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The Tech 20

The people, trends, and issues that most influence information technology today.
Scott Leibs, CFO Magazine
June 1, 2002

Because information technology exerts such a strong influence at companies of all sizes around the globe, and because it continues to evolve rapidly on many different fronts, it merits a closer look. On the following pages we offer snapshots of the 20 people, technologies, and trends that have had a major impact on the IT world in the past year, and that seem likely to remain dominant forces in the months ahead. Many affect finance directly, and they all promise (or continue) to reshape business in ways none of us can fully imagine.

#1 Adaptive Systems
Most people are familiar with efforts to model computers after the human brain, but recently researchers have turned their attention to the human body as analogue. If computers had something akin to an immune system, an ability to "heal" themselves without human intervention, that would go a long way toward alleviating the problems posed by increasingly complex systems. IBM, the Department of Defense, and other research centers have already begun to build some self-healing properties into software. Experts say rudimentary forms of adaptive systems will come to market in the next 1 to 3 years, but a world in which the entire IT department is a machine that would go of itself is 10 to 20 years away.

#2 Jeff Bezos
President, Amazon.com

While it would be an overstatement to claim that as Amazon.com goes, so goes E-commerce, it wouldn't be much of one. Jeff Bezos and company not only popularized the online hawking of books, CDs, and pretty much anything else that will fit in a UPS truck, they also made pro forma accounting seem almost de rigueur. Almost. The company's most recent quarterly results put it back in the red after it posted its first-ever profit — using GAAP, no less — in Q4 2001, as post-holiday volumes dropped. That did not come as a surprise, and in fact Amazon did better than expected. CFO Warren Jenson said in April that Amazon should achieve its objective of "free cash flow for the year." But whether it becomes the Wal-Mart of the online space or the Kmart remains to be seen, and many will watch Bezos's every move for clues as to what and what not to do in E-tailing and E-business.

#3 Broadband
The collapse of companies like Global Crossing and WorldCom might lead one to believe that every sector of telecom suffers from gross overcapacity, but the "last mile" problem continues to plague America. So argues Technology Network, a consortium of approximately 300 technology-company CEOs and senior executives that wants to see 100-Mbps Internet access reach every home and small-to-midsize business. Arguing that such a network will create more than 1 million jobs by the end of the decade, TechNet is pushing for a national policy built largely around telecom deregulation. Consumer apathy for DSL and cable-modem services would seem to suggest that consumers, at least, don't feel a compelling need to be that wired, but when 300 CEOs say they want something, one has to take them seriously. Large companies can afford T1 lines and virtual private networks; a broadband revolution could benefit small and midsize businesses by allowing them to be as wired as the big boys at relatively low cost.

#4 Collaborative Computing
Technology may not move so quickly after all. In 1945, the Massachusetts Institute of Technology's Vannevar Bush published an article in Atlantic Monthly magazine called "As We May Think," which proposed a technological "infostructure" that would facilitate collaboration and knowledge sharing. More than half a century later, "collaborative computing" has emerged as a hot buzz phrase — Volvo Group recently spent $10 million on software that will help truck designers work together more easily and reduce the number of prototypes needed. That's not surprising; after all, the Internet grew out of Darpanet, which was designed to allow researchers at four universities to work together. The real surprise may be that it's taken this long for companies to realize that a team may be more effective than the sum of its parts.

#5 Contingency Planning
Once upon a time, contingency planning was relatively straightforward: make sure your critical computers are supported by backup power sources, reserve time at a "disaster recovery" site, and keep a box of Triscuits in the desk drawer. But companies are no longer masters of their own information destinies: with the Internet and telecommunications networks now vital to corporate life, a disaster that strikes well away from headquarters can still bring a company to its knees. That has forced companies to revise contingency plans, and to look to the federal government to play a larger role in protecting critical information infrastructure. This summer the Critical Infrastructure Assurance Office, which was created in 1998 and expanded in 2000, will release version 2.0 of its national IT protection plan, spelling out how the private sector can respond to troubles ranging from electrical outages to banking and financial disruptions. As for tight budgets, you're on your own.

#6 Michael Dell
CEO, Dell Computer

Dell is a ubiquitous presence in Corporate America these days. His name adorns the best-selling personal computers in the world, and his up-from-the-dorm-room story continues to inspire chapters in just about every business book that rolls off the presses. Even if Dell had decided to make compote instead of computers, his innovative approach to manufacturing and supply-chain integration would still make him a corporate role model. No word as to whether "Steve," the company's popular "Dude, you're getting a Dell!" pitchman, is being groomed as a successor.


#7 Electronic Payments
It was like the good old days — for a week, anyway. When online payments company PayPal went public in February, its share price rose by nearly 55 percent. Then eBay announced that it was buying out Wells Fargo's stake in rival payment company Billpoint, and PayPal's price fell to its initial public offering level. But clearly there is life in electronic payments, and not just on the consumer side; business use may lag today (by a factor of five to one), but by 2005, B2B electronic payments could number more than 2 billion transactions. Last year, corporate payments via ACH exceeded $16 trillion. E-payments haven't matched early predictions, but as companies scrutinize the costs of paper processing, analysts say that electronic payments will move from exception to rule.

#8 Carly Fiorina
CEO, Hewlett-Packard

Walter Hewlett
Ex-Board Member, HP

Rarely have so many news stories about a business deal been prefaced by the phrase "at press time." First announced in September 2001, Hewlett-Packard's merger with Compaq Computer soon devolved into a bitter battle between two strong wills. HP CEO Carly Fiorina staked her job on the merger's success; HP shareholder Walter Hewlett argued that the deal would seriously damage the company co-founded by his father. On April 30, it appeared that Fiorina had finally won: a Delaware judge threw out Hewlett's lawsuit, clearing the way for Fiorina to prove that the largest merger in computer history will pay off for both shareholders and customers. Hewlett, ousted from HP's board the day after the trial ended, said he would support the merger, but would also keep a careful eye on the company. Fiorina vows to make good on her promise that the new HP will offer customers more products and services and the benefits of greater economies of scale. In May, HP spelled out its strategy with the slogan "We Are Ready." Customers hope "Willing and Able" will apply as well.

# 9 E-Business
Notice any upsurge in demand for Cobol programmers or client-server gurus? "E," as in E-business, E-commerce, E-everything, may no longer be cool, but every IT initiative of note continues to be built around the assumption that connecting employees, partners, and customers via the Internet is the top technological priority for business. In fact, E-business has simply become, like electricity itself, taken for granted. Not that it's a done deal: companies still face daunting decisions, and expenses, in taking full advantage of the wired world, and spending is expected to drop this year, largely because companies are delaying purchases of big-ticket items such as ERP and CRM. Online exchanges and "Net markets" have not produced a New World Order, nor has "disintermediation" transformed the business landscape. But as companies lick their wounds and reassess their strategies, any suggestion that "E" has gone the way of the company foosball table should be laughed out of the boardroom.

#10 Bill Gates
Chairman, Microsoft

While CEO Steve Ballmer has assumed an even larger day-to-day role following the departure of president and COO Rick Belluzzo, the ongoing antitrust case against Microsoft makes it clear that "chief software architect" Bill Gates is still the chief. Testifying in a case involving nine states and the District of Columbia, Gates defended the current marketing of the Windows operating system and claimed that a stripped-down version (with Internet browsing and media capabilities, among other features, removed) would "fragment" the market. Antitrust experts dubbed that the last argument of a monopolist. At press time the notion of any sort of "last argument" seemed remote, and Gates, while less combative than in months past, was clearly prepared to go the distance.

#11 Grid Computing
If there is a next big thing in the IT world, it just might be Grid computing. Backed by such tech giants as IBM and Intel, and a hot topic within the research community, Grid computing is a concept by which the Internet is used to share computing power, storage, and data. In a sense, all the world's computers can become one giant computer, accessible to all from virtually any computing device. It is, as IBM's Irving Wladawsky-Berger notes, "a grand challenge," but the concept has already been proven in several smaller implementations. Whether the Grid can envelop the world, however, remains to be seen.

#12 Michael K. Powell
FCC Chairman

Although he may not be top-of-mind for CFOs when talk turns to federal regulators, Powell chairs the organization that exerts enormous influence over all telecommunications matters, from deregulation to the technical aspects of Internet policy. A top priority for Powell this year will be determining what part of the broadcast spectrum will be used to facilitate high-speed ("third generation") wireless communications, and how and when to make it available to telecom carriers.

#13 XBRL
For CFOs, preparing and analyzing financial statements presents its own grand challenge. Often the numbers reported in the annual report don't match those filed with the Securities and Exchange Commission or posted on a company's Web site, due simply to clerical error. The manual labor associated with number crunching gets far worse when a financial executive tries to sift through the reports of competitors or potential acquisitions and make apples-to-apples comparisons. Different nomenclatures and reporting approaches can make such tasks extremely tough. Enter XBRL (extensible business reporting language), a subset of the XML language used to simplify data exchange via the Internet. Financial documents coded in XBRL can be distributed, shared, and analyzed with ease, and may soon inspire a raft of new analytical software that can import such documents and slice and dice them in sundry clever ways. Some software makers have modified their financial applications to facilitate XBRL coding. It may sound arcane, but it's a technology that CFOs can benefit from daily.


#14 Offshore Outsourcing
What began as a cheap fix for Y2K problems has exploded into a legitimate and multifaceted industry, which must make the manager of the Bangalore Starbucks very happy. India accounts for more than 85 percent of the offshore IT outsourcing market — Oracle Corp. now has 5 percent of its workforce there — but China, Russia, Poland, Ireland, and other countries are also happy to provide IT brainpower for only 60 percent to 70 percent of what U.S. workers earn. At a time when demand for traditional technology outsourcing is flattening, the offshore variety is predicted to grow to more than $17 billion by 2005 (and that's spending by U.S. companies alone), and account for up to 28 percent of the IT budgets of companies that take this approach. Already, though, IT salaries are climbing in India; analysts say "mundane" coding will move to China and other nations eager to emerge digitally.

#15 Portals
The profound impact of the Internet is not limited to the connectivity it affords. Its other hallmark, an easy-to-use browser interface, has given rise to portals, those one-stop shops for the harried knowledge worker that place reams of information and an endless number of functions just a mouse-click away. Whether it's a Web-based resource such as (to cite one example) cfo.com, a company intranet, a software-company site, or any number of other manifestations, portals have emerged as the dominant way to organize and access Web-based information. This "single-entry computing" should simplify life in the finance department as major ERP companies prepare to come to market with function-specific portals. B2B portals may succeed where online exchanges failed, uniting partners in shared Web spaces.

#16 Privacy
Descriptions of a company's privacy policy have become a junk-mail staple, but hashing out just what will and won't be done with the data at a company's disposal is serious business. As the Online Personal Privacy Act makes its way through Congress, businesses will have to think carefully about the privacy rights of customers, employees, and other constituencies. In recent testimony on Capitol Hill, Marc Rotenberg, executive director of the Electronic Privacy Information Center, took companies to task for a number of perceived abuses. New Federal Trade Commission chairman Timothy Muris favors more-stringent enforcement of existing laws rather than new legislation, but either way, companies are likely to feel increasing pressure to treat personal information as something other than a commodity. The matter is further complicated by efforts to crack down on cybercrime, since many proposed solutions are seen by some as violating the right to privacy.

#17 Security
Robert Morris, Kevin Mitnick, the Masters of Deception: computing has given us almost as many colorful "villains" as billionaire heroes. Unfortunately, these days one doesn't have to be terribly bright to be a hacker, and that particular form of equal opportunity has companies plenty worried. Spending on computer security remained strong at the end of last year and the beginning of 2002, but took a dip recently as several major vendors said they'd miss earnings targets. Analysts and venture-capital gurus remain bullish on security, but say that the old scare tactics no longer move the merchandise. Today, corporate customers are buying security software and services only if they're accompanied by the ultimate security blanket: verifiable ROI. Hackers might do well to reevaluate their own ROI: David Smith just got 20 months in jail for creating the Melissa virus.

#18 ROI
With IT budgets in outright decline for the first time ever, companies can't afford to make mistakes. So the financial calipers are being dusted off as technology buyers try (once again) to assess the hard-dollar outcomes of their IT bets. Those companies that sell technology are attempting to meet buyers more than halfway, offering all kinds of calculators, white papers, third-party endorsements, and the like. Miraculously, these measures indicate that every technology for sale today provides irrefutable payback. Enter the CFO, who knows a thing or two about ROI analysis and who, post-Enron, may be happy to school CIOs on the differences between internal rate of return and discounted cash flow. Could this be the rekindling of a beautiful friendship between IT and finance, or a passing flirtation that fades with the rising Dow?

#19 Mobility
Numbering almost 80 million and growing: such is the state of the American mobile workforce today. Telecommuters, multisite workers, and the prototypical traveling salesman make up most of that number, and if they work for large companies, then about 75 percent of those mobile workers have access to E-mail and corporate applications. Keeping that mobile workforce productive doesn't come cheap, though, and with more than half of the entire workforce going mobile at some point this year (although perhaps not often enough to qualify as truly mobile workers), companies will need to make more of their systems Web-accessible. The growth of the mobile workforce will force C-level executives to address information flow, performance measurement, and a host of other issues. All this as they try to retrieve a phone number from a PDA in one hand while making a cell-phone call with the other. No one said managing technology is easy.


#20 Web Services
Perhaps it's a sign of these technologically staid times that the technology currently enjoying the most buzz is an arcane and still-emerging set of standards that will...well, it's hard to say what, exactly, but that hasn't diminished the excitement. Web services are touted as a way to create and link software applications quickly and inexpensively, and to bridge older systems with new programs. That goal has been pursued with scant success for many years, but proponents of Web services say it's now within reach, thanks to the advent of the Internet and its underlying protocols. Microsoft, Sun Microsystems, and other companies have invested large sums in creating the tools that will enable programmers to create software using Web services. Other software and services companies happily tout their new adherence to Web services. Caveat emptor.

Scott Leibs is a senior editor at CFO.




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