Banking

Will the Internet's ability to bring people together save the New Economy?

After the terrorist attacks in New York City and Washington, DC, many CIOs are rethinking travel plans for themselves and for their staffs. As companies ponder how to do business with less travel, many may turn to virtual meeting and training solutions.


Within the scope of “new politics,” Americans are targets, covert wars are being fought overtly on domestic soil, and the escalation of war and annihilation rhetoric shows no sign of subsiding. Given the tightly woven threads that link daily life and the technology we use to improve it, the realization of this new political reality will also mean dramatic differences for the economy as a whole and particularly for the New Economy (a.k.a., the digital economy). In this article, we’ll look at the short- and long-term ramifications for the economy and for CIOs who must plan technical strategies for their companies as they attempt to adjust to life after Sept. 11, 2001.

The immediate impact
In the near term, all stocks will be affected because the attacks have driven consumer confidence to an all-time low. Some stocks may be hit so hard that the companies themselves may face extinction or dramatic restructuring—especially insurance, hospitality, rental car companies, and the airlines—despite the multibillion-dollar bailout approved by Congress. The only airlines that stand to benefit from this tragedy are the small, local jet-leasing and rental services. Those airlines tend to know all of their passengers in advance and can refuse service to new ones. They cost a little more than commercial airlines, but they don’t have the same security restrictions.

Before the tragedy, my normal monthly travel schedule consisted of five or six business round-trips of one to three days each. In addition to the five airplane tickets, that meant an average of five rental cars and 10 nights of hotel time. I’m already looking for alternative ways to accomplish the same tasks (teleconferences vs. face-to-face meetings, negotiating via e-mail, video conferencing where possible) to avoid getting on an airplane.

From talking to other business travelers and reading surveys from hospitality industry watchers, I know that I’m not alone in my desire to reduce out-of-town trips. The Business Travel Coalition, in a recent national survey of corporate travel managers, reported that 62 percent banned trips for the rest of the week of Sept. 10, 2001, and 88 percent expected across-the-board cutbacks in planned trips.

In the same survey, 56 percent of the 187 corporations said these events had "very significantly" eroded their confidence in the security of the country's aviation system. The result of fewer trips overall will mean layoffs, increased unemployment, and an even higher drag on consumer spending. The Fed can’t drop rates much more to stimulate spending (the prime rate was down to 3 percent at last count) unless it starts giving people money to spend. In fact, President Bush tried that with a federal tax refund, and that’s not working either.

The desire to avoid air travel isn’t just about fears for safety. It’s also about convenience. Now that you have to be at the airport sooner (most airlines are suggesting two hours before the flight) and on the airplane longer (for additional security checks of personnel and baggage), there are many situations where a five- or six-hour drive is as convenient and much less expensive than taking a plane and renting a car. The irony here is that what’s bad for the traditional, face-to-face business meeting may be the watershed event for the adoption of its electronic equivalents.

Short-term and lasting effects in the tech sector
In the long term, these events could be the beginning of widespread deployment of technologies like Internet conferencing, distance learning, and remote support. Consider the performance of WebEx stock since the tragedy. In the early days after the attacks, the stock was trading at a 40 percent premium over its former level. Other technology stocks that promise the ability to allow companies and their employees to work effectively over longer distances will be rewarded for their development work as well. Many people don’t realize how much more usable and convenient these new remote conferencing services have become. Many more will be finding out over the weeks and months to come.

Already projected to grow dramatically, the distance learning industry also stands to benefit from the tragedy. Rather than learn about new technologies at conferences or out-of-town briefings, many technical companies are already looking at producing and participating in electronic technology briefings. Cisco and Great Plains have both been effectively promoting the Web as a distribution point for technical briefings, and many other companies will follow suit. Microsoft has been providing content from its TechEd conferences after the event on Web sites for the last couple of years. It would make sense for the company to look at making its technical content more widely available in a timelier manner using Internet-based distance learning technology.

The other technology that gets rave reviews in the corporate space once it is adopted but is still languishing in the company-to-consumer space is remote software assistance. Companies like PCAnywhere have been very successful getting their technologies adopted in corporations, but the high per-client costs have limited their success in the consumer market. As Microsoft releases Windows XP this fall with built-in Remote Assistance technology, it will be interesting to see if companies rush to adopt it. Minimizing trips to the desktop in the past has always been about cost. In the future, safety and security concerns may move to the top of the list.

Will your company reduce travel?
Are you currently using any of these electronic solutions to reduce the need for travel? Are you thinking about adopting any of these technologies? Tell us how the recent terrorist attacks will affect business travel at your company.

Net worth
Unfortunately, the next logical place for the terrorists to strike is the Internet itself. Given the increasing reliance on the Internet as a backbone for commerce, its symbolism may be as attractive a target as were the Pentagon and the World Trade Center. Many companies will consider privatizing connections to their offices, where VPNs connecting to the Internet would have been sufficient just 30 days ago.

But companies who have made their bets on the Internet as a resilient conduit for transactions may get the last laugh. Remember, the Internet was originally designed by the military to withstand widespread attempts to knock out its ability to communicate. That foresight may end up being the thing that saves the New Economy after all.

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