Quarterly Journal on Management
From the publishers of THE HINDU BUSINESS LINE
Vol. 2 :: Iss. 3 :: February 1999
Different World
Koshy George
The internet is the emerging business tool for companies the world over. The pioneers, consumer oriented for the most part, have adopted and adapted the internet down to the retail level with spectacular and encouraging results in profit and other terms. Classic examples of "e-commerce", as business on the internet is referred to, include world renowned and new "names" in eateries, supermarkets, financiers, fashion stores, travel and accommodation, leisure and sports, entertainment, engineering, utilities, real estate, agri-business, etc. covering virtually all known commercial endeavour.
This shift in business paradigm has been particularly motivated by seven key, and often real-time, features of the internet, and its associated technologies, a direct result of communications and IT achieving worldwide utility, and middle-class affordability. The seven key features are:
1. Interactive communication with
target(s);
2. Derivative feedback on target(s), and group/class behaviour;
3. Suitability to complex
segmentation;
4. Low cost global interaction;
5. Low cost global dissemination and access to information and people;
6. Positive impacts on enterprise
management and development costs; and
7. Astronomical growth of internet penetration worldwide.
All these have contributed to significant reductions in the costs of finding and retaining customers, while allowing the same resources to encompass a wider customer base. Again, the ability to differentiate between classes and groups, coupled with effective access to selected targets and undiluted and instant feedback, implies that companies provide better researched and targeted services and goods to diverse segments. This augments customer satisfaction while reducing the costs of interaction and building sustainable commercial presence and growth for the future. These reasons alone justify the investment for further development of e-commerce and related capabilities such as intranets and extranets.
India, thankfully, has decided not to miss the 'bus stand' altogether, forget `missing the bus' alone, and has pledged to create a nationwide internet backbone of large enough capacity or bandwidth, to meet the requirements of individuals, organisations, and governance. Though, as with all such well placed intentions, one suspects that the system so created will "crash" under its own weight sooner rather than later, simply because few people worldwide can predict the growth of this phenomenon with any degree of accuracy. Again, the predominance of government infrastructure in a field where quantum and tangential technology induced operational shifts can take place overnight, one wonders whether response to such frequent evolutionary change will ever be cogent, coherent, and responsive enough, under such a regime, for the purpose of business. Nevertheless, one can only ignore a growth rate in excess of 180 per cent at one's peril.
In partial recognition of this fact, the government has encouraged private ISPs, and by the end of the year 1999, internet access will be available in 168 cities and towns across India. This creates a potential medium-term market of 50 million internet users and consumers of goods and services of a minimum education and threshold networth for the most part, who can be approached by the IT industry as well as other IT empowered consumer oriented business to sell directly without the necessity of physical proximity.
The transport and courier industry is evolving to permit cost-effective and on-demand distribution for various businesses, nationwide. This alternative marketing system, when in place, will seriously question the utility of the existing simplistic consumer goods and services business models, and hopefully provoke segmented approaches and complex marketing models better suited to India's diversity.
In order to achieve this market potential, as many telephone connections, PCs with OSs and related internet software, modems, & optimal bandwidth at the level of ISP(s) and the gateway(s) will need to be in place in these areas, at declining costs in absolute terms, such that affordability does not remain an issue for the early majority or the third wave of users, who will rapidly follow this second market penetration wave by the early minority of internet users.
Barbara Harriss in 1972 classified innovation adoption in India in an agricultural context, into innovators (5%), early adopters (11%), early majority (34%), late majority (34%), and laggards (16%), in terms of HYV (High Yielding Variety) adoption by the farming community against time. While the class composition and sizes may vary from situation to situation and business to business, the generic pattern is pertinent for entrepreneurship in India. For, migrating one's business partially or wholly to the internet is akin to setting up shop for the first time, on a new, and in this case, virtual planet with a near total lack of rules, norms, and practices, combined with high obsolescence technologies linked to equal redundancy in human skills. This, in effect, requires Indian business to take a steady and stable approach to colonising the web, on a least cost basis, till adequate in-house knowledge and expertise with the nature, dynamics, and evolution of the internet and its related technologies are created.
For Indian enterprise, the current economics already make excellent business sense, and the truth of this can be seen from the various 'known and unknown' businesses in India that have already established a presence on the World Wide Web (the main component of the internet), however minimal. Furthermore, as the internet is amenable to investments proportionate to the real scale of a business, without affecting presence, it becomes true that scale does not matter significantly. Thus, internet exposure, as opposed to site visitation and revenue generation, of a footwear retailer will be the same as that of a sports goods and sports wear MNC, irrespective of investment in the web site, and by default, worldwide.
Internet Fraud, Security, & other related issues
In such an environment, and given that absolutely anyone in this world with access to the internet can have a web presence for "free" or not much more considering the benefits, the first issue that arises for the business user is credibility. For established businesses, this is not an issue, as the market at large (if nowhere else, then in one's home country), is aware of their existence and their work. For newcomers to business, while the internet provides a low-cost medium to a nation-wide and global market, the issue of credibility nevertheless looms large. This can only be addressed by providing a quality service on the internet, which begins with saying what you mean and meaning what you say. A dose of creativity in so doing does help.
IT-aware criminals worldwide have defrauded governments, the military, banks, general business, social organisations, and individuals by technologically enabled invasion and subversion of web-based and linked systems for criminal gain. They have done so without retribution in most cases, even if caught. One simple low-investment example of the latter, is the registering of established "names" of businesses, as web sites. The absence of domestic and global legislation and regulation of the internet, simply because of the technical and legal complexities involved in so doing, have largely contributed to the perpetration of such and other frauds on an increasing scale.
The first-come-first-served approach to the registration of internet domain names, without credible verification and authentication, has contributed to this situation. For example, Shyam Chorwala with no qualifications and a net worth of Re. 1.00, with the aid of his cousin Tom Hawalawala, in San Jose, with $100 to spare, registers ITC.com as his web site and having done so before ITC Ltd, effectively denies ITC Ltd the use of its name on the internet.
Going to court is no option in India. We are yet to wake up to the challenges of defining effective legislation and enforcement in this context, especially as legislation per se is not the answer where billions of dollars are at stake, given the quality of enforcement of existing statutes in this country and given that the problems of "internet" jurisdiction have yet to be addressed, leave alone resolved via a globally "binding" treaty. To illustrate, a bank in India is sizably and electronically defrauded via the internet. The cyber criminal is traced to a "rogue" state, inimical to Indian interests, where the rule of law is decidedly non-existent at worst, and one gets the drift...
The only answer to this kind of fraud is to immediately register your business and/or brand name(s) at "rs.internic.net", if still available, irrespective of whether you plan to use the web only in the future. InterNIC, is the Non- profit organisation based in the USA that is solely responsible for handing out Internet Domain Names worldwide. A business doesn't need to know more than its contact person, communication numbers, business address, and business name, to register. A step the reader can very well take himself or herself despite internet ignorance.
Thereafter, re-evaluate the security of existing or proposed usage of the internet in your business, whether at office or at home, formal or personal, and even if only restricted to a few key individuals on stand alone machines or just e- mail via VSNL for example, and particularly in the context of a LAN/WAN, to ensure that each machine/node's operating system and browser level setup has enabled, the best possible protection against viruses, internet push and pull technologies, hackers and crackers, and in-house misuse or ignorance. Combine this with hardware controls and data encryption, for best cover.
For a detailed understanding of the kinds of frauds being perpetrated, the laws being considered by the USA in particular (the biggest victim), and an insiders exposure to the internet, especially and even if you're still in the dark, visit your nearest cyber cafe, spend a few fifties, register your name with InterNIC on-line, and search the net using the search argument "internet+fraud", for starters. Thereafter, search for the web sites of direct competition besides unrelated business, in order to study the ways in which your business can make use of the web. The cafe's "sys op" will be glad to show you the ropes. Cultivate him for low-cost solutions to major internet problems.
Once the list of sites corresponding to your search on "internet fraud" is downloaded to your terminal, visit as many sites as possible that relate to this argument (internet searches do turn up dead sites, multiples of the same site, and rubbish mixed with worthwhile sites). Expect to have your time wasted till you learn to use more powerful and focussed search arguments and search engines/directories/meta sites. Experience is the only answer, till the powers that be figure out how to effectively structure, administer, and regulate this global network that nobody controls or owns.
Which brings us to the question - "How does one begin to address internet security ?", and, "How safe are you as an individual or a business while using the web ?" Any Unix & C conversant network engineer with a grouse against you or society at large, is capable of "cracking" into the most sophisticated system to date with the tools of his would-be-trade freely available on and off the internet. Hackers break into systems. Hackers include a vicious sub-set called "crackers". The latter damage. The former take pride in proven ability and the challenge offered, and in principle, do not profit from their exploits. The latter do; and being mercenaries, your competitor could hire them to bring your web presence and your business down, if not keep tabs on your activities. The West has begun to use professional hackers to control crackers.
The difference between hackers and crackers being attitudinal, and knowledge and expertise driven, it pays for the new business to either develop a quality in- house hacker to design, develop, deploy, maintain, and upgrade one's site, or go to an external web site designer, as is found to be cost-effective in the individual case, though the latter is only a short- to medium-term palliative to immediate ignorance, as outsiders do not transfer internal knowledge/expertise.
However, if you do out-source, don't be impressed by the jargon, charges, the "names" behind the designers, or the hoopla of the sale process. Stick to tried and trusted technologies in hardware and software and web site design, while remembering that most cyber vandalism thrives on the transparency of TCP/IP and Unix based ISPs linked to Windows 95 and higher version users, with added vulnerability for users basing their systems on Windows 98. Furthermore, protect yourself with a valid and registered web site development and hosting agreement, that pre-defines jurisdiction and other key issues in this context.
To know what to look for in drafting a development and hosting agreement, visit the leading web hosts' web sites and study their offers and agreements in depth.
Expect the same, if not higher standards as best applicable to you, especially if the site is going to be located off-shore. Don't forget that the internet is a dynamic entity and better offers appear all the time. Furthermore, as the rules are being developed as one goes along, your agreement with your developer and host can go further than that of others precedent, if legally reasonable and justifiable. Again, treat web site design as a software development contract and expect detailed specification sheets for the development of your site. You are not buying tomatoes. Web programming is a precise science and does not permit generalisations or loose language.
For those on a tight budget that gets tighter, remember that the best software covering all web related requirements, is available free on the Internet. This freeware, is more often than not, more reliable and suitable to business and individual users than the branded equivalents. For instance, download the Apache Web Server software to set up a world standard web site server, and do likewise with Linux for an excellent OS. The only cost to you is the connect time required to download these packages using a download manager given the large file sizes involved. As with most freeware, the source code is also available free thereby permitting the program's customisation to user requirements... Something that Microsoft would rather die than do/permit, given its limited world view.
In conclusion, the internet is going to transform the way people interact while expanding the horizons of all. The technologies involved are complex and evolving dynamically. It is imperative that the first-time user of the internet develops in-house understanding and capability vis-a-vis this phenomenon, such that his/her business, irrespective of scale, gains from being on the internet.
Security and fraud are key factors in this regard and business is advised to study the same in depth before venturing anything substantial, while remembering that the best things in life and on the internet, are free.
Finally, for those who remain unconvinced of the need to learn about and use the internet, here's one globally worthwhile reason to do so. The internet is eco-friendly as far as the usage of paper is concerned, and will, in due course eliminate its use worldwide amongst netizens as citizens of the net are called, and as every citizen of this world will, in the fullness of time, be.
Enough reason to migrate wouldn't you think ?
Koshy George is a Bangalore-based consultant. He can be reached at kgeorge@blr.vsnl.net.in.