Taking on the world

by Martha Heller

December 6, 2000 —

In order to stay competitive, U.S. e-businesses need to start expanding into
global markets, and multinational companies will have to start doing a huge percentage
of their business on the web. Are there any false assumptions that companies tend to
make when going global?

They almost universally underestimate the magnitude of the task. It's like if you
have children, the first child feels like one child, but the second feels like four,
and the third feels like eight. The more countries you add to your multinational e-
business, the more complex the management of your infrastructure. Even if a company
already operates globally through traditional channels, its management usually doesn't
understand that the internet changes everything.

What I've seen happen is people all of a sudden hit the wall. They are doing great
e-business in the United States and say, "Well, we'll just use the same infrastructure
for the rest of our global business." But when they try to draw on the public internet,
the train comes to a screeching halt.

What gets in their way?

The public internet. It doesn't work nearly as well internationally as it does
nationally. When you're dealing with inter-country connections, the delays and
additional routings can cause significant problems for end users. And for companies
trying to build global brands in local markets, inconsistent user experiences can have
a serious impact on their brands.

If E-Trade provides a good customer experience in Los Angeles, but a poor one in
Australia, its global brand will suffer. There are local competitors in Australia with
a local brand presence, so for E-Trade to be successful in that market, they have to be
as locally relevant -- as fast, reliable and secure -- as they would be if they were
located in Australia.

When you go from Los Angeles to Australia through more than 20 router hops and a
number of different networks, you not only get degradation in performance, security and
consistency, you no longer have any idea where that user is coming from, and that
information is extremely important.

Why is it so important to know where the user enters your network?

An end user anywhere in the world should be able to read a global website in his or
her own language, without first having to visit an English page that says "check the
language you prefer." A truly competitive e-business operation will give users content
that is locally relevant: in their own language, with the price list in their currency
and with the right product set.

It is illegal, for example, to include an ad for Viagra on a website accessed in
Singapore. If you can't identify where the user enters the network, you may not know to
block certain content when you need to. It is illegal to carry telephony traffic into
China over an IP network. So if a company that has a call center as a part of its web
services conducts telephone communications with Chinese users, they could get locked
out of doing business in China.

How are companies dealing with the technical, cultural and legal problems that
arise when using the public internet to do global e-business?

They are shifting to high performance networks. They know that they need to move
from the public internet, and they're choosing not to build themselves. So, we see a
trend toward outsourcing and to demanding service level agreements from their partners.
Companies are beginning to understand that it is uptime, reliability, guaranteed
through-put and speed that determines the success of a global brand. It is expensive to
do global e-business, relative to the free public internet, so companies are saying to
their partners "put your money where your mouth is."

What are some of the questions companies contemplating a global e-business should
ask themselves before going forward?

Does this country adopt rapid change in general, and more specifically, is our
industry changing rapidly in that country? A country may be ready for online shopping,
but not for financial services.

Are low cost internet devices available in this country? The more users with easy
access to the internet, the more successful your business. China is interesting in that
a large segment of parents are placing great emphasis on making sure their children
have access to PCs. I predict that as these children grow up, there will be a very
large internet-ready population in China.

What are the regulatory and legal issues that govern this space, not only around
technology and telecommunications, but also around content, privacy and local codes of
internet behavior? What flies on the web in Scandinavia may not fly in India, and
companies need to know that.

CIO