ANALYSIS: Smog and the Internet

By Bob Diefenbacher

It's vacation time and, for people getting away from the office for a few days, it offers an opportunity to stand back and take a wider view of our technological environment. It means a chance to forget the pressure of solving tactical problems and enjoy the pleasure of reflecting on the future. So, that's what this month's Inside/Out is doing.

A column by Fred Alger, CEO of the New York-based investment firm Fred Alger Management, entitled "Big Profits Are in Store from the Online Revolution," published a couple of months ago in The Wall Street Journal, makes some pretty bold statements about our future. If Mr. Alger's predictions are accurate, the Internet really will change our world.

Here are several of his statements:

* Reflecting on the impact of previous speculative fads in the stock markets versus today's Internet stock frenzy, Alger says, "Neither bowling nor tulips ever had the power to transform the world's economy [as the Internet does]."

* Considering the impact the Internet will have on commerce, he says, "No force has ever shrunk the globe like the Internet."

* Analyzing companies constructed only for Internet commerce, he says that as conventional companies reduce prices to meet electronic commerce price competition, "much of these savings will accrue to the bottom line of the Internet companies, which don't have the capital expenditures that conventional delivery forms do."

Assume he's right. Then physical distance is almost meaningless as a factor in many transactions. We will not be driving to do comparison-shopping. It will happen online. When we do drive it will be only to pick up something we bought online that can't be delivered, or to see something we are ready to buy once we have made a final physical check. No more trips to multiple stores to find products and compare prices.

Taken to a not unreasonable extreme, doesn't this concept bode well for solving a portion of our clean air problems? Fewer short trips in smog-belching automobiles. Longer life for automobiles because they are not used as frequently for short trips that add lots of wear and tear. Less need for more roads and shopping centers. If these were to happen, they are a plus.

But people want to see what they buy, you say. That may be, but analyzing some personal acquisitions over the last couple of months has convinced me that I'll accept the descriptions and good photography in well-designed catalogs for many purchases formerly done in person. Certainly buying technology products without leaving the office is acceptable. And so are most clothing purchases-at least for those not addicted to making high-fashion statements. Also office supplies, medicines and food supplements, books and the like, and of course securities and other banking transactions. Some say even groceries and consumables are fair game. Is this the end of the warehouse clubs?

A downside to this at-home-commerce, however, is the potential that we become an even more insular society. How does this "cocooning" help us understand the need to solve the problems of inner cities? Hiding in our wired homes, we are even more oblivious to the difficulties, violence and other ills plaguing elements of American society who do not have the same access to the new world of Internet commerce as the "technological elite".

There is a true danger that those that "have" will live in gated communities isolated from those that "need." And ultimately, this may break out into some kind of class warfare, perhaps practiced electronically.

Another aspect of the Internet comes close to home for IT managers. Thomas Potts, an AS/400 consultant, writing about the May 10th Inside/Out says that by the close of the next decade he believes Internet based application service providers (ASP's) will render IT staffs extinct for all but the largest companies. He sees outsourcing application development and operation as the natural consequence of network computing.

Leaving aside the primary focus of Alger's article, which is on the impact of Internet companies on non-Internet companies and the stock values of each, a broader effect of the Internet will be to change the way people live. Regardless of which companies survive and whose stock price soars or plummets, we are already living differently because of the Internet. It is a revolution in communication and commerce, Alger says. From the Inside/Out viewpoint, we truly are in the midst of a major societal transformation, but perhaps just a little too close to see it clearly or appreciate it fully.

After 18 years in marketing and sales at IBM, Bob Diefenbacher founded Denbrook Systems Associates, an IT consulting firm based in Malvern, Pa.