To emerge Net winners in tomorrow's Web-dominated world of business, corporations need to reconfigure their systems strategies to seamlessly blend with the e-conomy, argues The GartnerGroup.

They're spinning the Web around your company. Sure, e-commerce may still be in its infancy, but that's precisely why the opportunity is at its greatest. As every ceo knows by now, instead of limiting their Websites to peddling brochureware, companies must use the Net for marketing purposes, leveraging their e-presence for product-support, customer-service, retail sales, and as a delivery-channel for electronic goods and services. That's not all.

For, the Net will transform your business landscape. By 2003, it will become the predominant mechanism for conducting business--be it business-to-consumer or business-to-business--in North America and Europe. In the Asia-Pacific region, more than 35 per cent of the transactions on Web trading-sites still take place via the fax and the phone. That will change. The term network-connected will take on new meanings, with ubiquitous Net-connectivity in the developed nations allowing a wave of telecommuting, leading to virtual organisations.

Not only will Net technologies become pervasive within enterprises, they will also branch out into the homes of customers via higher-speed telephony and bi-directional cables in the more mature markets of Hong Kong, Singapore, and Australia. This pervasive one-to-one connectivity with customers represents both an opportunity and a threat. The former is an additional channel for reaching customers while the threat is the rise of unforeseen competition from virtual corporations. But the net result is that corporations will have no choice but to enter this arena. A definitive future-cast by the GartnerGroup, the world's leading forecaster of infotech trends, lays out the shape of things to come--and how you must respond.

KEY ISSUE 1.0. What key trends will affect the role of the Net?

Centralisation vs de-centralisation is a debate that many organisations encounter every day. We believe that the Net itself, and the adoption of its technologies within the information systems organisation provide strong, opposite forces that will not catalyse the complete re-centralisation characteristic of the mainframe era, or a return to the chaos introduced by pcs and client-server technology. Next-generation network computing applications, largely built on and enabled by Net technologies, will be based on a more dynamic, distributed environment that builds on the legacies of the previous eras.

RECOMMENDATION. Users should not expect the Net to force either re-centralisation or de-centralisation, but to enable an equilibrium that can provide for a more dynamic, distributed environment.

1.1 THE STRATEGY ASSUMPTION. Through 2004, the Net will remain identifiable as the logical network of networks (0.8 probability).

The role of the Net continues to evolve: it has become a data dialtone for connections to the outside world, and its technologies continue to have profound effects on technology and society. We believe that its role as the network of networks will continue throughout the planning period. New technologies will continue to be incorporated into the Net, and one of the most promising, Asynchronous Transfer Mode (atm), will play an important, but subservient role. atm will be relegated to a role as a fast transport pipe underneath the ubiquitous (Transmission Control Protocol/Internet Protocol) tcp/ip protocols that define the Net as a primarily logical, rather than physical, network that is implementation-independent.

The richness of complexity of a seemingly-disparate network of networks, based on the original design of the Net, permits the assumption that this model will last through the planning period. Discontinuity can't happen, and won't happen. tcp/ip enables this richness of coalescing networks, and will not be supplanted by 2004.

RECOMMENDATION. Plan on tcp/ip as the digital glue that will bind together disparate networks.

1.2 THE STRATEGY ASSUMPTION. By 2000, the Net will be dominated by network computing traits layered upon earlier client-server technologies (0.7 probability).

The 4 layers of the Net describe the continual evolution of Net technologies, applications, and impact. Just as the Net historically has not experienced discontinuous eras, we do not see this changing in the future. Rather, Net evolution will continue to reflect a layering of technologies. Just as point-to-point timesharing gave way to a browser environment over a Local Area Network (lan)-Wide Area Network (wan) infrastructure based on tcp/ip, we expect technologies like Java and Extensible Markup Language (xml) to layer on tcp/ip in enabling network computing applications, such as automatic platform adjustment and follow-me profiles, to focus around portal destinations and, ultimately, reside on the network itself.

Similarly, the impact of such an evolution will drive the cost and difficulty of using the Net down, enabling increasing numbers of non-pc-savvy end-users to drive the Net to mass market numbers, with the sum effect of transforming the business fabric of the Net from sell-side to a buyer-centric marketplace built upon decision-support and mass-customisation applications.

RECOMMENDATION. Don't expect dramatic shifts in Net evolution, but an evolution of technologies and applications which rely on previous eras' innovations. Initiatives begun today should be thought of as evolving--not Start. Stop. Then, Start Anew.

1.3 THE STRATEGY ASSUMPTION: Bandwidth to the home will continue to be a limiting factor to Net adoption and technological development through 2003 (0.8 probability). However, solutions will be closer, and access methods will vary widely by geography.

Since applications running over the Net can either encompass or be an adjunct to media such as telephony, broadcast tv, radio, and print, the devices that enable these interactive Net applications are proliferating. The pc-centric box-and-monitor access metaphor is splintering into an array of devices on a spectrum from tv-centric to pc-centric, largely freed from the office or home desktop.

However, expect the continued use of voice and fax as an adjunct to these emerging technologies in the Asia-Pacific region through 2003. Furthermore, expect the extreme costs of telecom and network services in the Asia-Pacific region, and the virtual absence of cable infrastructure outside Australia and The Philippines to keep consumer-access largely relegated to analog modems through 2003.

RECOMMENDATION. Recognise that as we develop systems to accommodate the scarce commodity that is bandwidth, we are developing, perhaps, the next Year 2000 problem since the motivation for storing dates in 2 digits was conserving a scarce commodity at the time: storage-space.

KEY ISSUE 2.0. How will Net-derived technologies evolve?

Once an enterprise has decided that a technology will play a role in its future business processes, it must determine the optimal time to invest seriously in the technology. This is no easy task. If the enterprise launches its efforts too soon, it will suffer through the painful and expensive lessons associated with deploying an immature technology.

If it delays action for too long, it runs the even greater risk of being left behind by competitors that have succeeded in making the technology work to their advantage. This problem can be eased significantly by understanding the hype cycle of emerging technologies which follows a predictable pattern of hype, disillusionment, realism, and, eventually, productivity.

RECOMMENDATION. Technology-planners should assess the relative impact of a technology, and act early in the hype cycle for high-impact technologies, no matter what the enterprise's normal level of technology aggression is, while waiting for others to move first on technologies that are less relevant to the core of their business. Even risk-averse Type B and Type C enterprises should be selectively aggressive with technologies that are potentially significant to future success.

2.1 THE STRATEGY ASSUMPTIONS. Over 80 per cent of enterprise standards will be driven by Net-derived technologies by 2004 (0.8 probability). Through 2004, Net-derived technologies will succeed in the presentation of content-based information, but struggle in transaction-intensive applications (0.7 probability).

The Net has spawned many new technologies. However, many technologies that have been developed and proven in the pre-Net era will continue to add value to information systems organisations. Despite maturing, not all Net-derived technologies will prove themselves in business environments. For example, rich-media types, such as full-motion video and latency-sensitive audio, will remain immature for business applications.

Net-derived technologies have, largely, been designed to deal with content-based information and, as such, will be most applicable in similar types of information systems applications (which are increasing). Many will succeed internally, based on this value proposition. But they will not generally replace established infotech that deals with transaction and data-intensive applications.

RECOMMENDATION. Clients should prepare for an influx of Net-derived technologies that will augment, but not replace transaction and data-intensive application technology.

2.2 THE STRATEGY ASSUMPTIONS. Although the majority of Net content will remain html-based through 2002, xml's role as an integrative metadata technology will not have to wait for the widespread adoption of the technology in browsers (0.8 probability). Java will continue to be the technology that keeps the Vendors Against Microsoft coalition together, and prevent Microsoft infotech domination through 2004 (0.7 probability).

Although the Net has spawned numerous new technologies, two in particular have captured the imagination of the mainstream as having tremendous potential far beyond the Net itself: Java and xml. However, these technologies are different, have different applications, have affected major vendors' strategies differently, and are starting to be used differently on the Net today.

Java, well into its third year of existence, is far beyond the aura stage and beginning to mature although there still remains much hype and misunderstanding. xml, however, is relatively new, and has yet to fall into the trough of disillusionment.

RECOMMENDATION. Clients should look beyond the deafening hype surrounding Java and xml, and match reality and the technologies' real benefits at any given point with their own needs.

KEY ISSUE 3.0. What will be the most effective strategies and tactics for users to exploit the Net?

Enterprise users are overwhelmed by data. This information overload must be corrected. One method to accomplish this is an intranet portal. Similar in functionality to Net portals, intranet portals provide an internal view of the enterprise's information and system resources. Information will be made relevant to the business of the enterprise and its users. In addition to home-grown intranet portals, which have been in existence in a few enterprises for years, products which facilitate intranet portals will become pervasive.

Intranet portal services will also be provided alongside traditional Net portal services. Intranet portals, by definition, offer personalisation albeit at the enterprise level. Personalisation at lower levels, all the way down to the individual, is an important feature. Electronic information within the enterprise, regardless of format, as well as relevant information on the Net must be indexed (for search purposes). An intranet portal will evolve into the workers' interface to an e-business and, thus, must be implemented in co-ordination with, and at the pace of your e-business initiatives.

RECOMMENDATION. Users should immediately plan for an intranet portal.

3.1 THE STRATEGY ASSUMPTIONS. By 2003, 80 per cent of North American enterprises will use the Net for telecommuting, access to mobile users, and communication with trading partners (0.8 probability). In the Asia-Pacific region, just 15 per cent of companies will use the Net for telecommuting while trading partner access will be up to 50 per cent (0.8 probability).

Through 2001, enterprises that minimise investments in Net technologies while distracted by Y2K projects will be forced to utilise System Integrators for enterprise service-provider activities. The Net will allow enterprise resources to be readily available, anywhere, anytime. This will allow a higher level of user-empowerment than ever before. As easily as we today pick up the telephone and call a colleague, we will use the tools and technologies of the Net and the Net itself to communicate and collaborate. Electronic workplace applications like e-mail and calendaring will be Net-sourced, i.e., outsourced to providers on the Net. The Net dialtone will become a reality, enabling a whole new generation of telecommuters and mobile workers.

This enablement will spread beyond the walls of the enterprise to trading partners and customers. It will grow beyond the virtual office to the virtual organisation, leading to a plethora of small enterprises that will leverage these capabilities to provide services. Mom-and-pop service firms will abound due to the new ability to interact, communicate, and collaborate without boundaries. Utilisation of firms overseas will increase dramatically, leading to a shift in the services sector away from the US/European Union domain to Third World countries. Caution must be taken, however, to avoid being locked into outsourcing as the only option. Enterprises focused on Y2K and, therefore, delaying investments in Net-related projects will encounter a lack of required skills.

RECOMMENDATION. Understand your future resource requirements, and match the outsourcing of Net skills with the overall objectives of outsourcing.

3.2 THE STRATEGY ASSUMPTION. By 2003, enterprises should not plan to replace their wans with the Net, but should plan for significant investments to supplement and extend their wans with the Net.

The enterprise Net infrastructure of today consist of private wans connected to the Net through highly-secured gateways, known as firewalls. Access by individuals is, typically, via dial-up into a Net Service Provider. In future, the dividing-line between corporate wans and the Net will start to blur. >From a user's perspective, it will be transparent. Digital certificates and biometrics will allow individuals to be identified without a possibility of fraud, providing authentication-mechanisms to safely enter private data-sources.

Virtual Private Network (vpn) technologies will allow known users to safely enter the corporate wan to access data and systems to which they are authorised. vpns will become the primary enabling technology for user-access to corporate resources via the Net, and both insourced and outsourced vpn implementations will proliferate. Few enterprises will use the Net to replace their private wans, but almost all enterprises will use the Net to supplement their private wans. Access to the Net will extend to public locales, such as airport kiosks and hotel room-based network computers. The maturity of technology and network connectivity will allow the Net to be used extensively for certain types of voice-traffic.

RECOMMENDATION. Users should examine alternate network options on a regular basis, and implement them when cost-savings or improved access are evident. Asian clients should be particularly aware that extreme networking costs will make such cost-savings difficult to achieve.

3.3 THE STRATEGY ASSUMPTION. By 2004, more than 50 per cent of enterprises will use the Net for 80 per cent of their external procurement activities (0.7 probability).

With the advent of extranets, fuelled by the proliferation of vpns, supply chains will be linked in most medium-to-large enterprises. Back-office systems will start to play a role as major Enterprise Resource Planning vendors integrate their systems between enterprises. Retail will continue to boom, with more products and services available on the Net. Credit-card payment will not be a concern with stronger encryption and better methods to hack-proof Websites.

Internally, enterprises will use their intranets for procurement of material requirement overheads goods. Externally, enterprises will use the Net for procurement of most goods and services. Enterprise information systems will be challenged not only to connect back-office systems via extranets, but also to provide flexible, secured connectivity for both short- and long-term business relationships. Insourced extranets will be dominated by vpns. Outsourced extranets will grow in size and number.

RECOMMENDATION. Users should examine their supply-chain mechanisms, and replace or supplement them with Net-based mechanisms that have more potential for cost-savings.

KEY ISSUE 4.0. How will Net applications evolve? Which will generate profits, and which will continue to haemorrhage capital?

The concept of Content Is King is dead. The heir-apparent is actionable content, which integrates analytical technologies with informational content to help support decisions and deliver answers. Content for content's sake has no revenue-model or value-proposition to support the tremendous effort and costs associated with its maintenance.

Web-based content will, increasingly, be purchased by business and consumers on a pay-per-use or subscription model in order to support decisions. The content aggregate of portals will serve as the draw to these on-line destinations, with actionable content supporting the evolving transactional marketplaces. Within these marketplaces, consumers will come to expect up-to-the-minute information for comparative analysis.

Consequently, advertising models as we know them, largely based upon physical and time-oriented placement revenue models will become irrelevant, supplanted by new models drawn from the target market knowledge aspects of direct mail, wherein the Net creates a value exchange proposition with the consumer.

RECOMMENDATION. Seize the opportunity to become part of the content aggregate of portal sites; develop actionable content applications that instil confidence in decision-focused interactions.

4.1 THE STRATEGY ASSUMPTION. By 2001, enterprises maintaining a basic presence or prospecting Websites will suffer attack from a Net challenger (0.8 probability).

BASIC PRESENCE AND PROSPECTING. From 1993 to the present, most Web-based Net projects were developed as tactical or experimental, and provided valuable enterprise learning experience. This learning must be leveraged in order to define a strategic direction.

BUSINESS INTEGRATION. As the Net matures, traffic increases, and planners move to link systems and processes across the enterprise to the Net, projects beginning in 1999 must become long-term prospects with rigorous planning, reviews, and quantifiable and subjective Returns On Investment goals.

BUSINESS TRANSFORMATION. Enterprises conceive new business, and migrate traditional business to the Net. Integrated back-office functions streamline supplier- and client-communication and replace paper-based functions.

RECOMMENDATION. Get strategic! The Net is rife with emerging competitive threats. Embrace this framework now so that threats may be transformed into opportunities. Asian clients will find dramatic cost-savings over the North American costs presented.

4.2 THE STRATEGY ASSUMPTION. The notion of the Net as a borderless, global marketplace will be a myth by 2001 (0.8 probability).

One of the early, idealistic promises of Net commerce was the opportunity to exploit a global forum and marketplace, free of governmental interference. This is a US-centric view of the Net, and will become a growing pain reality as enterprises exploit the Net internationally. Just as there is no such thing as a borderless, global marketplace in real time and space, we have no reason to believe one will materialise via the Net.

The ec already has strict consumer privacy laws whereas the US established a policy of industry self-policing. China is building the Great Firewall Of China as a way of limiting free speech and exposure to outside cultural influences. Although the Clinton Administration pledges no taxation of the Net economy, most countries view Net commerce as a way of boosting revenues.

RECOMMENDATION. Plan for the greatest return on applications that reach the broadest audience common denominator found in the least restrictive zones.

KEY ISSUE 5.0. How will doing business on the Net force major changes in enterprise business models, management strategies, and applications architecture?

Consumer-focused Web merchants must react to the dramatic and continual consolidation of user-traffic on the relatively few portal sites that are working to become full-service Net stops for end-users to access e-mail, news, and business information; participate in e-commerce and chat; and be part of an on-line community.

Failure to devise effective strategies for relating to these portals will diminish an enterprise's ability to win new customers, and could spur the defection of current customers. Very few enterprises possess the ability or desire to build portal sites themselves; most enterprises should concentrate on leveraging the marketing benefits of third-party portals. Once an enterprise identifies a portal strategy, it must immediately and rigorously pursue it. Those that made no portal strategy decisions by mid-1999 will risk missing the opportunity to leverage portal traffic altogether.

5.1 THE STRATEGY ASSUMPTION. Consumer-focused enterprises considering deals with Net portals, micro-marketplaces, or affiliates for advertising, content, or services should not be enticed into long-term arrangements as volatility, not profitability, rules in this domain.

RECOMMENDATION. Re-evaluate any current commitments or payments to e-malls and portals based on their payback. Avoid making any long-term commitments.

Excerpts from Internet Strategies Scenario, by Patrick Meehan, Research Director, GartnerGroup. (c) 1999 GartnerGroup. All rights reserved.

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