Two Technology Executives, Two Views of the Virtues/Perils of ConnectivityPublished: April 11, 2007 in Knowledge@Wharton
When Robert Carter looks over the connected world of online communities that many experts call Web 2.0, it is hard for Carter -- the chief information officer and executive vice president of global shipping giant FedEx Corp. -- to curb his enthusiasm.
"The marketplace is a virtual space, and it creates value in an exponential way," said Carter, going on to describe web sites that allow fans of TV shows like "Desperate Housewives" to buy items they saw in an episode, or football season ticket holders to sell unwanted tickets -- and then call upon FedEx to deal with the realities of the non-virtual world to move these objects around.
Al Nugent, the chief technology officer for computer giant CA, surveys the same universe and also sees the promise -- but he worries more about the perils of a system that relies on so many different structures and vendors, creating greater risk of an operational meltdown, as well as new security concerns.
Nugent, a computing pioneer with more than 30 years experience, believes that in the rush to create Web 2.0 and other advances, the computing industry has set up a world in which too much failure and risk is tolerated. "If your car had to be re-booted after every 100 yards, you probably wouldn't drive it," he said.
In a sense, FedEx's Carter and CA's Nugent, the opening and closing keynote speakers at the recent Wharton Technology Conference 2007, were fitting bookends, providing two very different snapshots of the same ongoing revolution in computing and telecommunications connectivity that dominated the daylong discussion.
The theme of this year's technology conference was "Monetizing Innovation: Business Strategies for a New Generation of Technologies." Arguably, few companies are doing a better job of that than FedEx, the $35 billion global giant that handles the physical side of delivering goods bought and sold in online marketplaces -- bringing together people who would not have been able to find each other prior to the Internet.
"We talk of the atom network -- the way that we move stuff around the planet," said Carter, who oversees the computerized logistics of FedEx's complicated systems for delivery, billing and customer service and has won many of the information industry's top awards since joining the Memphis-based firm in 1993. In that context, Carter has positioned FedEx as the heir to a long legacy of shipping businesses that includes oxen hauling goods to a central market, the Silk Road and Yankee Clipper ships.
What has changed, he said, is the surge in technology, which has been critical in FedEx's steady march to become not just the industry leader in overnight shipping, but also an increasingly major player in ground shipping, international-trade logistics and now business centers with its purchase of Kinko's.
Carter touched on that history, beginning with the revolutionary handheld scanner for tracking shipments in the late 1980s and extending to a new project called Smart Package -- devices sent with each shipment that, in tandem with Google Earth, allows FedEx to track shipments to the street level.
Yet to Carter, these cutting-edge advances in hardware and software pale in comparison to the potential of online communities to create wealth and marketing opportunities that simply did not exist prior to the Internet. As an example, he showed the Wharton audience a photo taken at a recent garage sale that pictured a household electric fan for sale for $2. FedEx researchers then looked on eBay for that identical electric fan model and found one that had been bid up to $58.
"The information that moves around on these networks is as important as the physical networks themselves," said Carter. He sees the future -- not to mention future business opportunities -- when his three daughters pull out their laptops to connect with friends on sites like MySpace. "What's out there are their friends and their community."
That's why FedEx has been hard at work identifying online communities -- in the same vein as eBay -- that ultimately lead to actual commerce and the need to ship objects around the globe. For example:
- Delivery Agent -- and its increasingly popular web site called SeenOn.com, launched just last November -- allows television viewers to go online and shop for the actual items from their favorite shows. These items range from an Aston Martin convertible that was driven on ABC's "Desperate Housewives" to a pair of $160 jeans that was worn on the same network's "Grey's Anatomy."
- StubHub, the San Francisco-based online ticket broker -- with the support of the NFL, the NBA and other major sporting organizations -- hooks up holders of extra or unusable event tickets with fans who are eagerly seeking to buy them at market value. StubHub was recently purchased by eBay for $307 million, a price that Carter said he considered a rare bargain in an era when some dot-com companies can go for inflated prices.
Carter said he even saw the power of an online community in FedEx's home city of Memphis, where he has operated a couple of restaurants. After his first one failed, he turned to some local disc jockeys and other influential young people for help in creating buzz for a new place called the King Biscuit Diner. They helped promote the restaurant on MySpace.com and as a result, the upscale diner was profitable in its first month.
Yet while Carter spoke with great enthusiasm about the possibilities created by that access to information, he also offered a sobering lesson about some of the dangers as well. The paradox was summed up in a quote from Yale computer expert David Gelernter, who predicted with amazing accuracy in his 1991 book, Mirror Worlds, that "a software revolution will change the way society's business is conducted, and it will change the intellectual landscape."
Carter noted that just two years after writing Mirror Worlds, Gelernter was critically injured by a letter bomb from Theodore Kaczynski, known as the "Unabomber," who believed that computers were destroying mankind's individualism. The episode illustrated one of the risks of a connected society, and in a way it mirrored the much more cautionary tone of the closing keynote address that CA's Nugent delivered from the same podium eight hours later.
Consumerism and "Bloatware"
With a background in the computer industry that dates back to the 1970s when he began working with Hewlett-Packard, Nugent -- a former chief technology officer at firms such as Xerox and Novell -- is, like Carter, a high-tech enthusiast, with several different computer systems and five terabytes of storage ("I don't use any backup," he explained) just in his own home.
Yet Nugent is clearly more of the worrying type, and what currently keeps him awake at night is the sharp rise in connectedness and the security and performance risks posed by that increase, especially with rapidly multiplying new types of computer-driven devices, like mobile phones, toys and cars.
"I guess one of the things that annoys me a little bit about technology is the notion of consumerism," Nugent explained. "Technology's not being driven from the right place anymore. It's being driven by what happens in individual homes, or what will sell well on the shelves at Wal-Mart. Now that's not a bad thing -- I'm not anti-capitalism -- but when it starts to create more problems than it purports to solve, I get a little nervous."
Nugent said that a big concern is "creeping featurism" in devices, such as cameras in cell phones, that is adding complexity, and also risk and reliability issues. In particular, he worries about the back-shop demands of the very same types of connectivity that Carter had extolled in his talk.
He showed a dizzying, cluttered slide of all the technology vendors that one CA client uses to run its systems, calling it "pretty much a laundry list of just about every technology provider on the planet." That complexity "bleeds into" a corporation in a number of areas, such as purchasing. On top of that, Nugent said he believes the computing world is being dragged down by what he calls "bloatware," software and hardware that is now extraneous yet still there.
He said computer complexity creates costs that the average customer doesn't see. About 60% to 80% of what businesses spend on information technology goes toward "keeping the lights on," while only the remainder can be spent on future innovation or, equally important, proactive measures that enhance reliability and security.
What's the solution? Nugent said he would like to see fiercely competitive technology companies find areas where they can collaborate more in making it easier to establish the identity of users, for example, and also in finding better automation. Such moves, he noted, would free up more back-end resources to even more fully establish the connected world that front-end executives like FedEx's Carter are so eager to establish.
"We have the technology to solve these problems," said Nugent. "It's just not being used creatively."