Collaboration

Analysts agree that CIOs must think globally

By 2005, Americans will represent a minority of Internet users. As the Web becomes truly worldwide, American CIOs must take note of how this shift will affect their roles and responsibilities. We'll tell you what three key areas you should be monitoring.

In the next five years, European and Asian users will dominate the Internet. Obviously, this tremendous shift in the Internet user population could have wide-ranging effects on both Internet usage policy and the implementation of new technologies. So how do these changes affect the role of the U.S. CIO? CIOs must monitor these changes closely and check the pulse of this shift by concentrating their observations on three key areas: the wireless market, the international ISP wars, and the changing market demands on their company’s product or service brought on by globalization.

Parlez-vous le Web?
By 2005, European Net users will outnumber, and Asian users will meet or exceed, North American users, according to a report from Cedar Knolls, New Jersey’s Probe Research. Their research also indicates that although the Internet remained basically U.S.-centric between year-end 1999 and year-end 2000, the U.S. share of peak demand has declined by 10 percent as usage from other continents has increased.

This shift is further evidenced by the expectation that Internet usage among non-English-speaking users will soar in coming years. Global Reach, a marketing communications consultancy that helps clients attract Web site visitors worldwide, estimates that as of December 2000, there were 192 million English-speaking Internet users and 211 million non-English-speaking users. By 2003, the number of English-speaking users is expected to rise to 230 million, while the ranks of non-English users will jump to 560 million, a 165 percent increase—allotting them a 70 percent portion of the total Internet user pie.

Watching wireless
CIOs should pay particular attention to the implementation of 3G (third generation) wireless technology, both globally and stateside, said Derek Lacks, senior analyst with the Delphi Group in Boston. According to 3GNewsroom.com, this new technology could up transmission speeds from 9.5 KB to 2 Mb/sec.

Europeans and Asians, who already access the Internet primarily through cell phones and PDAs, are best prepared to take advantage of this new technology, but the United States will lag behind in this arena for two reasons, said Lacks. “One reason the U.S. has not been so quick to jump on the 3G bandwagon is [because of] its commitment to other infrastructure technologies already in place, which would be costly to bring up to 3G standards,” he said. The bigger obstacle, explained Lacks, is that the larger cellular and wireless networks are reluctant to make the investment in this new technology, although market demand will eventually force them to do so.

Because Europe and Asia will be on the ”bleeding edge” of wireless, Lacks suggested that U.S. CIOs watch how these technologies will be used to solve business problems in their organization’s European or Asian offices. These wireless innovations from abroad can also serve as a benchmark by which CIOs can determine how their wireless use stacks up to other U.S. companies and where they can improve, said Lacks.
For more information on 3GInternational Telecommunication UnionInternet traffic researchAlexa Research Inc.Cooperative Association for Internet Data Analysis (CAIDA)Internet Weather ReportNUA Internet surveysRelated TechRepublic content"Traffic on the Web""Web site traffic analysis: Perspective""Gartner's overview of Web site traffic analysis"
A volatile ISP market
High-speed access is a key reason for the predicted increase in Internet traffic, said Tony Marson, research director of Internet Traffic and Global Carriers for Probe Research. Unfortunately, however, the increased availability of high-speed Internet access will also create an unstable market, he said.

Marson, who is also the editor of Probe Research’s biweekly Worldwide Internet Traffic report, suggested that U.S. CIOs with interests in Europe and Asia monitor the current volatility in the ISP markets in those regions. “As these larger international Internet routes become more available, there is a danger of oversupply,” he explained. On the upside, this surplus of Internet services could lead to a drop in prices for buyers.

On the downside, however, Marson said that the surplus will create much competition in the ISP market, which could mean the end for many ISPs. This seismic shift in the overseas ISP market could be a dangerous situation for U.S. CIOs caught unaware, he said. For example, many companies were caught off guard in September 2000 when iaxis, a major player in the European ISP market, started having serious financial problems and laid off 70 percent of its workforce. Sprint, who used iaxis as its backbone ISP provider, was forced to reconfigure its entire European effort to accommodate the change, Marson said.

Globalization brings new market pressures
This new mix of Internet traffic means that many U.S. companies that have not dealt with globalization issues in the past may have to do so now, said Rob Lancaster, Internet market strategy analyst with Boston’s Yankee Group.

“This represents an enormous market opportunity. The key is how well companies—specifically the CIOs and the IT people—are able to adapt,” said Lancaster. Because this is a new, still-evolving marketplace for many companies, Lancaster suggested that U.S. CIOs watch two things: where the new demand for their product or services is coming from and how quickly this demand is growing.

“U.S. companies will need to make sure everything they’re doing in the U.S. translates to this new market, but this is not as easy as it sounds. You can’t just replicate what you’re doing in other countries because of cultural and economic differences,” he said.

Another part of the larger picture, according to Lancaster, will be customer support within this new market. “If 30 percent of your customers are coming from Asia, then you need to support those customers, and that means setting up customer-support centers either in Asia or in the U.S. that will be able to handle those responses,” Lancaster said. But the creation of these additional customer-service centers won’t come cheap. U.S. companies that expect to profit from this new market will have to make sure their infrastructure is scalable, Lancaster said, so that they can handle the new traffic efficiently.
How has your enterprise reacted to the emergence of the global market? Share your experience with other CIOs and TechRepublic members. Send us a note or post a comment below.

Editor's Picks