April 2001

It's Your Move

BY KEVIN MAYER

In fact, the merging of technological and business planning has inspired no little speculation amongst analysts and consultants, particularly with the advent of e-business and e-commerce. For example, analysts and consultants worry aloud that e-business initiatives may be launched with little involvement on the part of information technology specialists. More than a few observers have cited a disconnect between IT and business units.

A KNIGHT ON THE RIM IS GRIM
If you were to delve into strategically oriented business literature, or if you were to visit the Web sites of analysts and consultants, you would likely be impressed by all the references to chess. You'd read articles peppered with chess allusions, and see logos incorporating the outlines of chess pieces. Chess, it seems, is emblematic of a strategic outlook.

Chess references are popular largely because they may so easily support the general idea that business planning and IT planning need to coincide. For example, you could argue that just as success in chess depends on using the chess pieces in concert, success in business depends on business and IT units working in harmony. Further, you could argue that just as chess emphasizes the importance of dominating the center of the board with your most powerful pieces, business should emphasize the importance, the centrality, of essential resources, including IT resources. Such reasoning elevates IT. That is, IT needn't be thought of as a mere cost of doing business. Rather, IT may be considered a strategic asset.

At this point, however, we might recognize another disconnect. That is, a disconnect in addition to the one between business planning and IT planning. And this additional disconnect brings us back to communications solutions, for it concerns convergence and voice-enriched applications. Specifically, convergence and voice-enriched applications are absent from the bulk of the literature and speculation about business and IT planning. The absence is curious, given the potential of communications solutions, particularly in the strategic dimension.

Indeed, given their power, communications solutions should be in or at least near the center of the board, so to speak. In business, no less than in chess, it is folly to marginalize your most powerful assets. As a chess enthusiast might say, "A knight on the rim is grim."

THE CONVERGENCE GAMBIT
At the risk of overworking the chess analogy, we might consider the role of convergence within an opening gambit, a sequence of moves in which pieces may be sacrificed so that other pieces may advance to more powerful positions. In the case of a convergence gambit, the sacrifice would be the elimination (or at least the relaxation) of a cherished notion. Namely, that in communications, cost considerations are paramount. Then, once this sacrifice has been accomplished, communications infrastructure could be recognized as an asset that could be well or poorly deployed, as a resource capable of supporting unprecedented business opportunities.

Basically, the problem is that as soon as you've advanced to a powerful position, you're obliged to defend it. Premature attacks risk exposing vulnerabilities. And premature attacks are not confined to the chessboard. They happen in business, as we've seen with the dot-coms and various ill-starred e-commerce initiatives.

If only the dot-coms had attended to their infrastructures before expectations lost all grounding in reality. In retrospect, you could say that dot-com infrastructure was lacking in terms of reliability, scalability, and even usability. The shame of it all is that these qualities are so highly developed in the realm of converged and voice-enriched applications, the very applications that have to date been marginalized in nearly all the grand schemes for e-commerce.

For years, the "mission critical" ethic has preoccupied call centers and business operations relying on interactive voice response. And, more generally, business phone systems have emulated the public phone network in terms of reliability and uptime. Finally, developments in convergence have always emphasized usability in terms of respecting the preferences of business users and customers for natural interactions and natural communications, typically by way of accommodating voice and video. By necessity, communications solutions have been "mission critical" as well as "real-time."

Perhaps now, in the wake of the dot-com shakeout, it will be easier to argue that strategic business initiatives, such as those in the e-commerce space, must attend to fundamentals such as adequate infrastructure. Bold attacks mustn't be launched prematurely. They require the support of the appropriate enabling technologies. Thus, these technologies, including convergence-oriented solutions, should be at or near the "center of the board," or central to any strategic initiative, together with business planning and IT planning.

GAMBITS ON A GRAND SCALE
In many industries, relatively static periods are punctuated by dynamic, even convulsive episodes, often as a result of deregulation. In fact, the results of deregulation have been observed in so many instances that we're seldom surprised by the events triggered by deregulation. That is, these events describe a fairly typical sequence. What's interesting is that the sequence also applies to de facto deregulation imposed by technological innovation. Of course, the example of deregulation is somewhat simpler, since deregulation by mandate is typically an isolated event, whereas technological innovation seems more and more continuous. In any case, the sequence is as follows:

1. Little or no apparent change. Hardly anyone is familiar with the new opportunities before them; so, not surprisingly, few people do anything (The Web? What's that? Another high-tech toy?).
2. Dramatic, if isolated, surge of novelty. A few pioneers demonstrate the potential of the new opportunities (Yahoo! and Amazon become familiar names).
3. Stampede of new entrants. Enter www.tomdickandharry.com.
4. Profusion of innovations. We witness an impressive array of bells and whistles (Flash animation, talking banners, click-to-talk, audio downloads, streaming video, etc.).
5. Shakeout. Suddenly, many of the new entrants crash and burn (condolences to William Shatner).
6. Sober aftermath. It becomes apparent that while consumer-oriented applications generate all the hype, the real opportunities are in applications with demonstrable business utility (hence, attention shifts to business-to-business applications).
7. Maturity and consolidation. Waves of acquisitions result in a few mega-players plus a motley assortment of niche players (for example, there is already speculation that the large, regional carriers will absorb most of the emerging application service providers).

So, when we review this sequence, we can see how it coincides with the idea of a gambit. That is, a sacrifice that allows certain pieces or entities to advance to a position of power. On the industry scale, deregulation or technological innovation triggers a cycle in which many new entrants appear on the scene, only to crash and burn, or disappear through acquisition, so that a privileged few may survive to become household names.

A PROTRACTED MIDDLEGAME
While the sequence just outlined is agreeably simple, it is, in fact, too simple. It suggests an orderly rise and fall or, to return to chess terminology, a discernible succession of opening, middlegame, and endgame phases (endgame, of course, would correspond to the maturity and consolidation stage).

In business communications, since the technological innovations are more or less continuous, we seem always to be shifting back and forth amongst the middle stages, entertaining a consistent stream of new entrants, witnessing a seemingly never-ending succession of new platforms, applications, and services. The stability of the endgame phase seems always deferred.

To account for the protracted middlegame in business communications, some observers cite the consistent improvement in underlying technologies. A prominent example is the repeated doubling of processing power predicted by Moore's Law. Other examples include the impressive gains in Ethernet speeds, continued fiber deployments, and bandwidth gains in the last mile by various means, including xDSL, cable, and fixed wireless. Also, we see the potential for ever-finer segmentation of the radio spectrum for wireless applications. Finally, and perhaps most magically of all, we have Metcalfe's Law, which holds that the value of any network element increases exponentially with the number of elements linked within the network.

Thus, the unsettled and unsettling middlegame phase will be with us for some time yet to come. Consequently, we may have to abandon the usual "changing of the guard" that accompanies successive stages in a deregulated or technologically innovative industry. That is, pre-shakeout, the emphasis if very much on technology. Post-shakeout, the emphasis is very much on business.

Before the shakeout phase, it's as if technology is moving too fast for anybody to exploit it for business gain. After the shakeout phase, it's as if the immature technologists have been dismissed, so that the grown-ups may assert the primacy of business fundamentals. A typical sentiment: "Technology alone is insufficient for sustained competitive advantage. Sooner or later, everyone has access to the same technology. Competitive difference depends on managing processes."

Well, in a world that is forever teetering on the technology side of the shakeout divide, you could wait a long time before you could safely relegate technological innovation to a necessarily uncomfortable but (finally!) accomplished phase. Indeed, it will become increasingly difficult to know which phase of which game you are in. And, if you're in the opening phase of a disruptive trend while your competitors are already in the middlegame phase, watch out!

ENDGAME
Actually, the heading for this section -- endgame -- isn't quite appropriate, since I don't see the onset of an endgame any time soon. Instead, for the time being, I see the need for communications across the technology/business divide, not just between IT specialists and business planners, but between these parties and the technology providers, particularly those with expertise in real-time, voice- and video-enriched communications. At present, real-time communications seems to be dragged along in the wake of developments instigated by mainstream IT, or even left behind as so much flotsam and jetsam. But, ultimately, real-time communications and the natural interactivity it enables will become more central. The "real-time" experience with mission-critical applications and the broad appeal of applications with natural interfaces -- that is, interfaces capable of accommodating the spoken word -- will prove invaluable in advancing the causes of e-business and e-commerce.

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