You gotta be in it to win it

William Raduchel is an animated, boisterous bear of a man, an enthusiastic extrovert who once and for all sweeps away the stereotype of the Internet junkie as lanky, awkward, post-adolescent Generation X outcast.

Raduchel, vice president of corporate planning and development and chief information officer at Sun Microsystems, runs arguably the most innovative collection of advanced Internet applications going at any company today: the Sun's worldwide corporate intranet.

That Sun is at the leading edge of Internet business applications should be no surprise. The company has attained enviable leadership supplying large-scale hardware and software platforms that have done more than their share in making the Internet as accessible and fun as it is today.

Yet at most companies, business tools, including the corporate network, end up being shaped to fit the prevailing culture. What some might find surprising is how effectively the Internet culture of information decentralization and democratization has shaped Sun.

"Power is in the homogenization of the network," says Raduchel, who as a professor at Harvard University mentored Scott McNealy, the man who is now his boss. At Sun, where its founders already were predisposed to new ways of thinking about communication, there is a "synchronous participative culture," says Raduchel, "an e-mail culture.

That means networking is not only geographically spread out but logically spread out, too, incorporating every level of the organization.

Raduchel tells the story of a general in the U.S. Army who permitted any officer or soldier in his regiment to send a note to him on an index card without fear of recriminations. There were a lot of the usual gripes, but every now and then someone would tell him that a group of jeeps went out without the right tires, or the wrong type of ordnance arrived in the latest shipment. While communication didn't always follow the usual chain of command, the general won a lot more battles with a lot fewer casualties. From the very start, Sun was built on the premise that an organization lives or dies on its ability to communicate effectively.

As a result, the Internet and the World Wide Web have become a lot more crucial to Sun's operations than voice telephone service. Employees send some 400,000 messages a day, Raduchel says. Every project has a Web site, bringing the corporate total to more than 3000. "The Web is our circulatory system," says Raduchel. "If you were to cut it off, I don't know how we would survive," .

Sun's intranet now is extending links to its important customers, electronic data interchange (EDI) and, more critically, electronic commerce. Again, Sun is ahead of most corporate users, but many are headed in this direction.

No bones about it The Internet is here. If you work for any carrier anywhere, and you have looked at the problems of America Online, the recent turbulence of network technology stocks on Wall Street, or even the dubious launch of Slate, Microsoft's on-line magazine, you may share the prognostications of failure of Internet business rampant in the general media. If you've decided that the Internet can wait, then start seeking work in the buggy whip industry. You won't make it in the 21st century.

The Internet right now stands to become the ultimate platform for corporate networking. It's also where local competition is beginning in earnest. And if that's not enough, it portends a shift away from the connection-oriented 64 kb/s, T-1 and T-3 hierarchies on which the local exchange carriers have built their networks to packet-switched, connectionless networks that have been deployed by Internet service providers, competitive local exchange carriers, international value-added service providers and some of these world's largest interexchange carriers, especially MCI and Sprint.

What makes the Internet so attractive is that it is the magic networking bullet corporate users have spent the last 15 years searching for. As a single platform for virtual private networking, the Internet, for the most part, solves: the bandwidth scarcity problem the protocol interconnection problem the multiple phone number problem the remote user access problem the time zone problem the multiple service provider problem.

Internet business has spawned an unfortunate collection of terms-intranet, extranet, industrial-strength Internet-the meanings of which can vary from speaker to speaker.

The most common buzzword right now is intranet. This generally defines a private user network that looks, feels and works just like the public Internet. Individuals use TCP/IP-based e-mail to reach each other and HTML browsers to download Web pages located on servers within the corporation. These servers can contain anything from sales performance and projections to forms posted by the human resources department. To keep confidential corporate Web pages out of reach of prying eyes, The company generally keeps its intranet servers behind firewalls-software that protects the material from being transmitted to URLs or domains that the organization does not recognize.

One step up from intranets are so-called extranets. These are private Internets that tie together groups of companies, or "communities of interest," that do business together. This could be a manufacturer and its allied distributors and retailers, along with its own vendors and banking partners.

They would use the public Internet to transmit and receive anything from parts orders and inventory data to payments and invoices. Generally, these transactions require encryption.

In addition to intranet, electronic commerce and EDI applications that can run on the Internet, users also look to the World Wide Web as a way of doing business.

In Spain, for example, Telefonica, working with Lotus Development Corp., has set up an Internet-based community-of-interest extranet linking architects, contractors and the Spanish government. Lotus also worked with a carrier in Asia on a similar network for IT professionals, which, like Spanish architects, must be certified by the government. In addition, Lotus has public network Internet projects underway in North America in the banking and insurance industries.

"Business Internet and intranet is where the profit is and where the greatest opportunity for revenues exists," says Mary Murphy, general manager of the telco and ISP market for Lotus.

A long, hard look A number of large corporations have already launched serious investigations into how to use the Internet to increase revenues, customer responsiveness and overall business efficiency.

Some of these companies, as you might expect, are the leading vendors of the technology that makes the Internet work. But not all the companies studying the Internet are in the computer or telecom business.

Boeing, for one, has detailed an extensive intranet plan, envisioning a day 10 years out when it will conduct almost all its business over the Web.

Caterpillar is the anchor participant in a test to see how well the Internet can reduce costs, increase customer support and satisfaction, and contribute to global competitiveness.

Under the auspices of the National Information Infrastructure Testbed, a 37-member consortium of corporations, universities and U.S. government agencies, Caterpillar has designed a hypothetical product supply chain that simulates its own distributed manufacturing organization. The only carrier member at this point is Sprint.

The trial of what InfoTEST calls the Enhanced Product Realization system is aimed at determining whether Caterpillar-and by extension any other manufacturing company with worldwide operations-can make design-to-delivery modifications for any product, anywhere in the world, within five days.

"What's badly needed in the industry is good data as to what the value of these services is," says Troy Eid, international executive director of InfoTEST.

Along with Caterpillar, Hughes Electronics and Sandia National Laboratories are serving as manufacturing sites in the simulation. 3M and Oak Ridge National Laboratory are acting as product suppliers. Texas Instruments is a product dealer. Each member participates directly in a joint, real-world, nationwide computing trial that must address common challenges such as system security, distributed databases and collaborative tool development. By the trial's conclusion at the end of this year, Eid says all the members hope to have a better grasp of how the Internet, intranets and extranets work and the benefits they provide. All the participants are committed to the Internet and want to make it work, Eid adds. "Our members have every intention of implementing extranets as soon as these problems are addressed," he says.

Looking to the leaders The extranet is "a series of common protocols that allows for the privatization of messaging, a higher level of security, transport for multimedia, and a series of information reporting so users can have a sense of how the network is doing," says Mark Bronfman, associate partner at Andersen Consulting's Communications Industry Practice.

As even InfoTEST is learning, that's easier said than done. But as users contemplate their networks' future architecture, they increasingly look to companies that clearly have their Internet act together.

The best examples in the intranet/extranet game, says Bronfman, are Microsoft, Cisco, Sun and Silicon Graphics. "They're doing technology testing to prove to themselves and the outside world that it works.

Cisco, for one, sees $2 billion in sales over the Internet by 2000 and clearly wants to be ready for it. It is building an environment with its customers that will be entirely electronic.

If any carrier is trying to gain a foothold in this business, this is it where it must start. It needs to demonstrate-from the chief executive office on down-that it understands the communications requirements for each major user on a very specific level.

Part of this "common visioning," as Bronfman calls it, means the service provider must be able to discuss ways it is using intranets for itself. Most LECs are at a serious disadvantage because they have not adopted the Internet into their daily business-let alone culture, he says. Few besides AT&T, MCI and Sprint can speak intelligently about applications from their company's perspective.

Competition for Web tone Do LECs get it? So far, all the hype about local competition has centered on residential service. While we sip our morning coffee, print and broadcast commentators have fretted over the prospect of more calls from telemarketers urging us to switch local carriers, much like the ongoing calling deluge from IXCs.

While some resellers will probably begin using these tactics come the era of true residential choice, that's not where the bulk of the battle will be. Public challenges from the IXC community about the effects of network unbundling on consumer choice may be a skilled feint to divert attention from their real attack. And for the most part, the Bell regional holding companies have fallen for it.

In reality, local competition will have little or nothing to do with choosing who sells dial tone and everything to do with who sells-to borrow a term from Sun's lexicon-"Web tone.

This is one reason IXCs have loudly and resolutely joined the effort to keep ISPs exempt from access charges. While IXCs have kept LECs busy arguing about voice, they have been boosting their investment in data networking and targeting the prime customers in every RHC territory.

Even so, the intranet/extranet battle is only beginning. Of all the major carriers, few have really articulated a strategic message behind their tactical moves. MCI, perhaps, deserves the most credit for stepping up to the opportunity, not only with a vision but with capital.

MCI out in front Vint Cerf displays the quiet confidence of a man who is seeing his own vision come to pass. At ComNet last month, he discussed the "vault" technology that will tie together MCI's voice and packet-switched networks.

"Customers won't know whether their services are using the voice or packet networks," says Cerf, MCI's senior vice president of data architecture and one of the original builders of the Internet. "We want to allow the two networks to interwork with each other. We're taking each network canvas apart and re-weaving them together thread by thread for a whole new canvas on which to paint products and services.

Among its advantages, MCI's vault technology would let voice and Internet protocol networks use the same databases, including those on MCI's intelligent network. On a videoconference with a customer account rep, for example, the voice network would carry the speech while the IP network would carry video and documents. Database dips could be made to determine call setup and search out specific customer data, including credit card validation for service orders or purchases.

Vault technology is still in its infancy. As of last month, MCI had not yet tendered bids for the IP gateway switches needed to tie its voice and data networks together. But the plan indicates how the company envisions its Internet business development and should give its slower competitors reason to accelerate their own efforts.

"MCI is taking the fight to the carriers," says Rick Matthews, a senior manager at Ernst & Young, which has done Internet business consulting for many major carriers. "Traditionally, they have been the most market-driven. If you were to ask any one of their Internet directors or presidents about the company's direction, you would get the same answer. At other companies, if you did the same thing, answers would be very different." MCI has offered commercial Internet services since December 1994, although those first efforts-plagued by high prices and delayed software delivery-did not get off to a flying start.

Yet the company consistently kept its eye on the larger goal. Since its launch of Internet services, MCI upgraded its backbone twice, first from DS-3 to OC-3 (155 Mb/s) and last year to OC-12 (622 Mb/s). This latest upgrade was part of a $100 million infrastructure infusion in 1996 to prepare the company for future IP-based business. Another 1996 initiative was globalization. Through its BT partnership, MCI began offering Concert Internet Plus, a backbone with internationally located nodes. MCI's final major strategic move in 1996 was to identify three Internet technology partners-Microsoft, Digital Equipment Corp. and Intel.

"1997 will be built on themes," says John Scarborough, director of product marketing for desktop and internetMCI services in MCI's business markets unit. These include "intranet, globalization, Web-hosting service and advancing IP to the desktop.

Each of the partnerships is linked to these themes, which as a group drives value into Internet service for business.

Through the distribution of Microsoft's Internet Explorer browser software and a customized version of the Microsoft Network on-line service, Scarborough is looking to solidify a desktop Internet strategy that would port many personal communications applications-fax, paging, remote access and the like-onto the Net. To gird its Web-hosting business, MCI will use Digital's Alpha 2100 server.

At its outset, the Intel alliance involves the creation of Web-based marketing and multimedia applications. The first joint offering, networkMCI Webmaker, is an all-in-one package for creating and managing Web sites. While this will let MCI showcase some of the more dazzling multimedia capabilities of the Internet, the agreement goes beyond mere product development and focuses on another critical yet undeveloped area of Internet business offerings: quality-of-service measuring.

"This is where we blur the line between computing and the network," says Scarborough. Through use of Intel's new MMX chips and hardware from Cisco Systems, MCI and Intel are developing services that will combine intranet and remote access-to-LAN offerings, both with guaranteed bandwidth and latency for multimedia applications. Key to the services are standard Internet protocols such as IP multicast, resource reservation protocol and real-time transport protocol that combine high-end PC capabilities with high-speed network transport.

The new services were rolled out last June in a phased multimedia Internet trial with a distributed laboratory connecting three major U.S. cities: Portland, Ore.; Richardson, Texas; and San Jose. The trial has since been expanded and now includes a distance-learning application. Other potential applications could include recording and playback of real-time videoconferences, 3-D graphical presentations, real-time audio and video "streaming," stereo sound over the Internet, corporate training on demand and video e-mail.

ISP onslaught Also building intranet and extranet practices are the ISPs. Although U.S. ISPs now number between 4000 and 6000, only a handful seem prepared to tackle service provision on such a high level. Some names repeatedly mentioned are UUNet Technologies, IBM Global Network, BBN Planet and Netcom.

UUNet exemplifies the ambition these companies are beginning to show. What sets it apart from most is that it is now just one unit of a tripartite organization rounded out by IXC WorldCom as parent and MFS as a sister subsidiary.

"We believe we are the best positioned telephone company in the world," declares Alan Taffel, vice president of marketing for UUNet. "We have Internet, long-distance and local loop, and a significant international presence.

UUNet launched its own extranet service late last year. The service promises access via MFS at speeds up to 45 Mb/s, end-to-end encryption and premises-to-premises quality-of-service guarantees. In late February, the ISP announced plans to invest $300 million in its network, including a backbone upgrade to OC-12.

"There are two primary limitations of corporate WANs today," says Taffel. "They are relatively expensive, and they operate in closed environments." As corporations begin to expand into electronic commerce and EDI, and as employees at remote locations have increasing needs to communicate with each other, it can be difficult to bring everyone onto the WAN. "Our service brings the economy of the Internet into the world of the corporate LAN," he says.

"With WorldCom, UUNet and MFS truly have all the pieces that let them bypass the local exchange," notes Biri Singh, senior consultant with Ernst & Young. "WorldCom definitely has a power play." The market still questions ISPs' capabilities to deliver top-notch reliability, especially when critical data is run over the Net, Singh notes. That may be the biggest advantage that telcos-including the RHCs-have, he believes.

West Coast attitude With an estimated 40% of worldwide Internet traffic originating or terminating in its home state of California, Pacific Bell is generally one of the more proactive Bell companies when it comes to building services off Internet platforms.

"Pacific Bell is asking about advanced services over the Internet-it's moving offensively with intranets, e-mail, [PC faxing], integration and access. They want to know about using [the Internet] for differentiation of services," says Van Cullens, head of Siemens Stromberg-Carlson's Internet business unit.

"The Internet is a celebration of services off an open platform, as opposed to vertical marketing," says Ed Callen, senior product manager at Pacific Bell Internet Services. "It's a breakdown of vertical networking. It's no more [separate] content, access and network-it's all tied together.

Naturally, Pac Bell plays its network reliability card from the top. "The plumbing is our knitting," Callen says, referring to the telco's network. "Many ISPs get caught up in the content.

Mark Fisher, marketing vice president for Pac Bell Internet Services, is even more declarative. "We will place our record for reliability against anyone's. Our network is earthquake-proof and bombproof. We want to take [reliability] to a whole new level.

For high-end business customers, Pac Bell Internet Services-in conjunction with Pacific Bell Network Integration-offers Internet access, installation and management, Web site hosting and consulting. The company is in its early stages of its intranet offerings, Fisher says, and is still developing extranet services.

Key technology suppliers include Sun for servers, Cisco for routers, Ascend Communications for terminal servers, Netscape Communications for client browser software, and Check Point Software Technologies and Raptor Systems for firewall and security software.

On the East Coast, Bell Atlantic's ISP unit is also tackling the Internet business market. "Bell Atlantic is delivering intranet services today," says Myles Mendelsohn, vice president of product management at Bell Atlantic Internet Solutions.

Detailing what he calls a "Chinese menu" of service options for business users, Mendelsohn says the company, working with Bell Atlantic Network Integration, offers dedicated servers for large customers, robust data centers for performance management and an array of access options including dial-up, 56 kb/s, frame relay and switched multimegabit data service.

Cisco routers and Sun servers are at the core of the network, he says, and the company uses software platforms from Netscape and Microsoft. "Right now we're hosting on Unix," Mendelsohn says, referring to the Web server software. "But we clearly see [Windows] NT opportunities in the near future.

Waiting for the Bells Overall, however, RHCs have been late in launching Internet operations. Only in January did the last of them-Ameritech-begin offering ISP services. And even those that have leadership positions appear to be behind the curve when compared with competitors outside the Bell company fold.

When it comes to the Internet, most observers agree that RHCs and large Independents like GTE are hampered by at least three factors.

The first is that they are extremely large organizations that still operate as bureaucracies. They make decisions are made slowly and manage by consensus, not by debate and persuasion. They don't encourage subordinates to disagree with supervisors, turf battles rage and information is brokered, not shared.

The result tends to be a handful of units with a piece of the Internet responsibility but with different addresses all over town. Even at Pacific Bell, work is spread out.

Pacific Bell Internet Services handles residence and small businesses. But when it comes to building corporate intranets, Pacific Bell Network Integration gets the job. Even then, Internet Services builds the platforms on which PBNI puts its applications.

In the meantime, the data network both companies sell is managed by Pacific Bell, the local operating company, which does business with Pacific Bell Internet Services and PBNI as a completely separate subsidiary. Other RHCs, including Bell Atlantic, another acknowledged leader, also follow this cumbersome model.

The second drawback is that users perceive telcos as having a frame of reference limited to voice networking. After two decades of watching LECs bumble in and out of the data communications services market without much success, many big ticket companies have long since concluded that telcos just don't understand data-never have, never will. The pricing and marketing disasters surrounding ISDN are just one of the recent examples they point to.

Also disconcerting to users is that telcos seem unable to apply the very concepts they claim to sell, and they often seem unaware that the organizations they have established to compete in a high-tech market are not up-to-date in their own use of networking tools and processes. They also come up painfully short on internal expertise in client-server computing and have consistent problems in the strategic use of information technology.

The third factor, which directly influences the first two, is the regulatory burden that RHCs face. Phone companies cannot structure their network operations and sales organizations like their competitors. For instance, even if an RHC met all the required provisions under the Telecommunications Reform Act of 1996, it remains questionable whether it could put together its local loop, long-distance and ISP businesses as tightly as a WorldCom could.

Yet industry observers say all these drawbacks are counterweighted by one fact: RHCs can run massive networks.

"The Bells have something no one else has: POTS density," says Ernst & Young's Matthews.

Adds his colleague Singh, "While the Bells have been slow, they will not surrender the LEC marketplace to competition easily.

How well RHCs, IXCs and ISPs move from here will dictate how well they begin the 21st century. "With electronic commerce, Web hosting and content, they've got the 'whats;' it's the 'hows' that are killing them," says Matthews. "Everyone got something to market last year and thought up the next steps.

For each type of carrier, he says, those sequences will be different. "The ones who will do the best will be the ones who can execute, and that will be in the next two years. Whoever can market it and make it happen will win."

If fuel for Sun Microsystems is information, January saw the company boost the octane.

That's when its top executives, including Chief Executive Officer Scott McNealy and William Raduchel, vice president and chief information officer, began using the first JavaStation Webtops, lightweight devices designed to exchange messages and pull software and information off the corporate intranet.

By the time of JavaStation Webtop's scheduled mid-June rollout, some 3000 users within Sun's worldwide operations will have had their PCs replaced by JavaStations. It represents Sun's commitment to not only offer the latest in information technology and concepts but use it, too.

"We're proving to our customers it works," says Howard Pelling, Java architect in Sun's Information Resources operation. "We're test-flying our own aircraft.

Webtop truly is the first network computer. It is the long-awaited appliance devoted solely to leveraging the power of both the corporate network and the public Internet. It's the customer premises equipment that provides, in McNealy's oft-repeated words, "Web tone.

In this regard, JavaStation Webtop may be the future of desktop information, where it matters not to the user where the information on the PC screen is originating. Sun isn't the only one working toward this goal either. Microsoft Explorer 4.0 will be the new template for the Windows interface, indicating that the Redmond, Wash., software leader also is preparing users for the day when, in the course of daily business, as much data, if not more, is downloaded from the Net as is drawn from the desktop PC.

Pelling reports that some 350 applications will be accessible from the Webtop. The human resources applications field, where 401(k) data, HR forms and other related material will have their own intranet Web sites, are expected to be hot spots, he adds.

In the end, not only will each project have a Web site, but Pelling sees each employee having one as well, much in the way that employees leave a voice mail greeting. The information may provide a daily schedule and an e-mail hot link.

Such prospects excite Pelling and others at Sun because they present the possibilities of the personal URL, which in many ways could be better and easier to use than the long-predicted personal telephone number. Jack in from anywhere and you'll be able to get to your own server space.

Sun's intranet may just be the start. "We want our users to access corporate resources on anything from anywhere transparently," Pelling says. "The Web browser is the portal into Sun's information system."-ST

On the way to Pacific Bell's Network Access Point in Fremont, Calif., you pass a section of Interstate 680 that's under repair. Traffic jams on this major artery into San Francisco start as early as 6:30 a.m. Even temporary overpasses offer little relief. The irony is that much of the data traffic in northern California heads out this way, too.

It's Pac Bell's job to make sure the data traffic doesn't get snarled like vehicular traffic out on the Interstate. At the network access point, technicians monitor the telco's statewide data network, which grew to 14,000 ports from 6000 during 1996, according to Jim Diestel, director of advanced services and industry marketing for Pac Bell. Almost all the state's Internet service providers, including Pacific Bell Internet Services, are connected to the NAP, as well as many of Pacific Bell's data networking customers.

High demand continues to keep the operation in peak form. Of the 650 switches Pac Bell uses in its data backbone, 22 are on the watch list, meaning they are close to capacity. Pac Bell's platform combines switches from Cisco Systems, Cascade and Newbridge Networks.

"We can't overcome the financial incentive for ISPs to use the public switched network," says Diestel, referring to the fact that ISPs don't pay access charges, a sticking point with the telcos.

Nonetheless, that doesn't seem to get in the way of the work. "Slow Internet access will not be tolerated," he says.

The personnel staffing the NAP use the Internet for performance management. In fact, anyone can monitor Pac Bell's performance. Daily data is available on the telco's Web site, www.pacbell.com/products/business/fastrak/networking/map.

The idea is to keep customers informed both of the network performance and the telco's quality parameters and measurements, says Diestel. "We keep 60 days of rolling statistics," he says of the Web page data. "Customers can check in anytime."-ST