The third wave, characterized by network-centric computing (NCC), is taking on tsunami proportions. Businesses that recognize the current wave's potential can leverage its power to help them achieve leading positions in their industries; those who don't might be left behind.
So far, the power of networks has not been taken full advantage of, according to Louis Gerstner Jr., IBM's Chairman and CEO. "We've put a 1985 mainframe on the desk of the clerical workers of the United States and many other parts of the world," says Gerstner. "And the utilization of that device is, by some estimates, 17 percent of its capacity."
In outlining his vision for network-centric computing, Gerstner emphasizes three developments that will mark the transition to a universally connected global computing environment: the recentralization of the role of the network server, the de-emphasis of the standalone client as a self-contained device, and the growing importance of the far-reaching broadband network.
"NCC recentralizes and reenergizes the importance of servers -- very powerful transaction and database servers that will manage both applications and data in a secure fashion," Gerstner says. "It doesn't make sense to put increasingly massive storage and application programs on individual desktop computers.
"When you have a truly networked environment -- whether it's inside a company or across companies -- and the technology for inexpensive broadband transmission, there is no reason to assume that you have to keep providing the data, or even the applications, in this box."
The concept of disintermediation -- which permits end users to directly access information without costly intermediate processing -- is driving computing's third wave. Disintermediation is a complex word, but the idea is simple, and therein lies NCC's power. Information and application processing is located within the network, which allows the broadest possible access and sharing through a variety of heterogeneous computing resources.
At the heart of this concept lies historical, vital, and (often unused) legacy business data. By freely disseminating this data, companies can empower individuals to eliminate costly processes and help improve productivity.
By simplifying access to global network-based information, the Internet will provide a level playing field for small and large companies, points out John Patrick, IBM's vice president of Internet Technology.
"The Internet," says Patrick, "introduces two powerful concepts: reach and compatibility. When you connect to the Internet anywhere, you're connected to the Internet everywhere. In the future, competition will come not only from industries that may not be expected, but from a country that you never heard of. The next good idea could be invented in Slovenia and marketed in Texas. NCC is about helping our customers get connected to their customers -- and about enabling them to extend their global reach and improve their competitiveness."
Frank Dzubeck, president of Communications Network Architects Inc., a Washington, D.C.-based computer industry consulting company, says: "The driving force of NCC is going to be what I call web computing, another version of distributed computing. You had client/server computing, and now you have web computing. In this version, however, the network does become the computer.
"Notes is the premier web application," Dzubeck points out. "It completely wraps the web up, and it's an established application development tool. I can get to anybody's Notes database through any web browser. And because it's been around for years, it's as solid as a rock."
This distributed computing paradigm shift, Dzubeck says, will likely be taken one step further with the adoption of technologies like Sun Microsystems' Java programming language. "Currently, a transaction takes place inside the access device [browser], but a Java execution could take place anywhere," Dzubeck explains. "Web server/browser combinations are the simplest, most robust client/server environment known. They make you and the network more intimate, which is as close as you're going to get to a virtual computing environment."
If NCC sounds as if it's all about high technology, it is. But more than that, it's about people. As Paul Saffo, forecaster at the Menlo Park, CA-based Institute for the Future, puts it: "Ultimately, the Internet is about community. It's [about] connecting people to other people in information-rich environments."
Such an environment was recently created for several hospitals in Ohio in the form of the Greater Dayton Area Health Information Network. The first of its kind in the United States, this partnership between IBM, Ameritech Ohio, seven local hospitals, and the University of Dayton uses state-of-the-art fiber optic and digital-telecommunications technologies to transmit patient health information among health-care organizations.
"The overall focus of the project is to improve the quality of and access to community health care while reducing health-care costs," says Joseph Krella, president of the Greater Dayton Area Hospital Association. The system, completed in November 1995, will improve efficiencies in patient care, lower the cost of sending medical images and records from one site to another, and ensure patient information remains confidential.
Everybody knows the routine: Go to the doctor's office and fill out clipboards of personal medical information. Change doctors, and the routine repeats.
"Today there is no smooth flow of information throughout the episodic-oriented health-care industry," says Gail Gulinson, IBM's vice president of healthcare data network marketing. "Too often patient profiles are paper-based questionnaires that make it difficult to share information."
The Dayton network allows individuals to establish personal profiles that go into a master personal index (MPI) and are shared among physicians, hospitals, and clinics.
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"This approach recognizes that patient care is ... a continuum that, properly re-engineered, will achieve a seamless integration of information, greater savings, and better patient care," says Gulinson. "The MPI [represents] the most radical shift in health care today. As the industry moves from an episodic, event-driven, and disease-oriented focus to a true continuum of care, an MPI will organize information around individual patients and the management of their care. It will replace what is now a series of disconnected visits, tests, and procedures ... and serve as the backbone of a modern health data network, something still relatively rare in today's health-care industry."
Because the information system uses a public telecommunications network, Krella adds, it can be expanded to encompass the nine- county GDAHA region. "This is a beginning; we're piloting the program with seven institutions. Our larger goal is to expand the network to every hospital, physician, insurer, and health-care organization in the area."
To support the venture, IBM and Ameritech Ohio each contributed about $2 million in equipment and services. Ameritech supplied advanced switching equipment, fiber-optic cable, and digital- transmission service; IBM provided onsite computer equipment and software for storing and retrieving medical records.
It's possible to foresee such networks around the world -- and a growing number of links among them -- as the health-care industry continues to look for ways to reduce costs.
But NCC's reach goes far beyond traditionally "closed" networks. As companies streamline how they do business with suppliers, vendors, and other business partners, the idea of leasing network services will become more practical. One example deals with corporate purchasing practices.
A survey of purchasing executives -- conducted by Intersearch Corporation Research at the National PO User Group's IMPACT '95 conference -- showed that a typical corporation wastes up to $34 million annually through inefficient practices. Most of the waste occurs in the area of "non-production" purchases that aren't critical to a company's primary mission. On average, large corporations spend more than $160 million in such purchases -- which totals about $250 billion annually in the U.S. alone.
About 29 percent of these non-critical purchases, known as mavericks, aren't bought through the purchasing department and, as a result, cost from 11 to 50 percent more. Fortune magazine estimates that by shrinking its purchasing bill by 5 percent a typical manufacturer can add almost 3 percent to net profits.
"Suppliers recognize that electronic commerce is fundamental in increasing profitability and customer satisfaction," says David J. Cassano, IBM's vice president of electronic commerce services. "Leading suppliers will exploit electronic ordering for competitive advantage."
To help control maverick spending, IBM recently announced the Electronic Purchasing Service (EPS), part of IBM's NCC strategy that uses the IBM Global Network. By creating electronic networked services that offer virtual "meeting areas" where goods can be can bought, sold, and traded electronically, IBM is helping companies stay on top of their bottom lines.
"Companies realize that electronic purchasing fundamentally improves how they do business with their preferred suppliers -- in ways that go right to the bottom line," says Sal Grillo, chairman of the National PO User Group. "Electronic purchasing also allows purchasing professionals to focus more on negotiating and managing contracts, by freeing them from processing transactions."
Four leading suppliers of office products and computer equipment -- MicroAge, Staples, Stream, and Uarco -- recently announced they would make their product catalogs available on the EPS system over the IBM Global Network.
"IBM's EPS allows MicroAge to give our customers access to electronic catalogs that can be customized to meet their needs," says Bob O'Malley, president of MicroAge Data Services. "Electronic catalogs are an essential part of our electronic commerce offerings, providing information to customers online regarding product offerings, pricing specials, and product availability."
The benefits of an EPS system are numerous. By combining the control and economy of centralized purchasing with the freedom and responsiveness of decentralized purchasing, companies can improve their order accuracy and free up time for value-added procurement activities that bring even more savings to the bottom line. Moreover, they are establishing connections with their buyers and suppliers that they could only dream about in the past.
The IBM Global Network (IGN), which operates in more than 850 cities and 100 countries worldwide, maintains over 5,000 host- based interconnected networks for more than 25,000 business enterprises and government agencies. IGN is the foundation for many of IBM's NCC plans.
With over 2,500 T1 and T3 circuits and 68,000 additional circuits worldwide, IGN is becoming increasingly popular as companies develop new ways of connecting to their customers. In addition, IGN offers a variety of networking solutions, including value-added telecommunication services; Internet access and navigation services; subscription access to network-enabled application services; and complete, end-to-end network outsourcing.
Recently, IBM announced a state-of-the-art, very small aperture terminal (VSAT) satellite communications network that will allow European customers to combine the best of land-based and satellite-networking technologies.
Peugeot and Citroën, Paris-based automakers, plan to use this two-way VSAT service to communicate with 4,200 independent automobile dealers in 11 European countries. Dealers will use the system to order vehicles and manage parts inventories. The system's voice and video capabilities will eventually allow the automakers to use live video conferences and taped broadcasts to send product announcements to their European dealers and hold sales meetings with them.
Because it's a true "open" system, IBM's European VSAT network will accommodate users employing various types of PCs, workstations, and diverse communications protocols. When fully deployed, the IGN offering will be the largest and most function- rich VSAT satellite communications network in Europe. Migration from terrestrial systems to IBM's new VSAT system -- managed by Axone, the distributor/operator of IGN services in France -- will begin in early 1996 and be completed within two years.
By making nominal up-front investments in VSAT technology, Peugeot, Citroën, and their dealers expect to realize significant savings in such areas as equipment maintenance, operations, and systems management. Response time for routine data transactions over the network will in most cases be two seconds or less, which is comparable to or faster than high-speed ground-based solutions.
"This will simplify connection procedures and increase the number of exchanges between manufacturer and dealer, while actually reducing communication costs," says Jean-Serge Bertoncini, IT director for Peugeot and Citroën. "And we'll have a much closer relationship with our dealers." He adds that car buyers will benefit from an improved exchange of information on product availability, streamlined order processing, and more efficient delivery scheduling and maintenance management.
The satellite system is "just another example of the evolution of IBM's NCC strategy" notes John M. Whiteside, IGN general manager. "Our European VSAT offering adds another dimension to the broad range of network-centric solutions we're delivering to customers around the world. These solutions are strengthening the ties between business enterprises like Peugeot, Citroën, and their dealers. Their customers are the ultimate beneficiaries."
Dr. Irving Wladawksy-Berger, general manager of IBM's newly-formed Internet division, believes the value of NCC can best be summarized by reflecting on the reach and pervasiveness of technologies -- like telephones and cars -- that were once as novel as the ubiquitous network is today.
"If you look at the value of the telephone, it isn't that you can access a hundred people, or even a hundred thousand people," observes Wladawsky-Berger. "It's that you can access just about everybody. The value of the automobile isn't that it only works on certain routes or takes you to certain places," he says, "but that it can take you almost anywhere."
Which leads us to the network.
"When things go from being available, to being widely available, to being ubiquitous," Wladawsky-Berger explains, "life changes, and things that didn't exist before become possible. That's how IBM wants to help our customers, by helping them take full advantage of these capabilities."
Whether you're attempting to connect your local vendors or map out a worldwide systems integration plan, IBM's far-reaching and holistic NCC strategy offers a wealth of comprehensive solutions. Internet consulting services, Web publishing, content hosting, electronic purchasing, legacy integration -- as the network grows, so grows the list of IBM offerings.
"As this notion of universal connectivity starts to be realized, a whole slew of questions are going to emerge," asserts Wladawsky-Berger. "When all our information systems are universally connected, what are the new ways of doing business? Of educating? Of practicing medicine?
"These are the questions we're going to be answering tomorrow," he concludes. "Everything else is just commentary."
See also:
Notes Heard Round the World
Getting Connected With John Patrick
An Interview With Dr. Internet