HOST:
Stuart Feldman, Director, IBM Institute for Advanced Commerce

TRANSCRIPT FORMAT:
Stuart Feldman: Introductory Remarks

Good morning. Thank you for joining us.

The Institute for Advanced Commerce was set up at the beginning of 1998. Some of you have followed the progress of our activities in earlier calls and meetings. Basically, the capsule history is that 1998 was spent getting going, getting involved, starting to create new technologies in various parts of IBM, getting our activities known in the research community, including the research community outside the traditional computing area.

In 1999, we have focused on leveraging this start, increasing our knowledge and influence on a more strategic plane involving the research community, starting even more technical work that is of an experimental nature, and also working very hard to move technologies that are getting ripe into real use. I'll come to those in a moment.

New work that we have underway at the moment has a big focus on the future of the electronic marketplace. We will have several white papers related to this topic, which will go up on our Web site in the near future. I encourage all of you to subscribe on the IAC Web site, http://www.ibm.com/iac. It's been redesigned to be much more functional and useable. Also, you can find a button on the top level that will allow you to subscribe to our mailing list. We'll be sending out a newsletter very soon, as we will be doing periodically thereafter.

We will have some papers on both technical and business questions, as we perceive the large-scale evolution of the marketplace. We're worried about both the technical issues of how the platform evolves to support the widespread distributed market and what some of these interactions will be on the marketplaces.

We also continue some path-breaking work on understanding the fundamentals of the future digital economy, an agent-based and multi agent-based world in part; how such an economy can itself evolve; the implications of adding learning to the comparison shopping and auction robots that will be part of this world. We have a number of technical papers and some interesting simulations demos that are well worth knowing about.

Another recent addition to IBM's advanced commerce research involves experimental economics, where we will be working to understand how real people behave in various economic scenarios. This is an established research area in academia. We have hired several excellent people from universities and other labs who will be doing this effort.

We've been working on some of the areas I just mentioned for more than a year, and they are sufficiently ripe that we are working with them in customer engagements, actually moving these technologies out into the real world. I'll get to how the IAC is starting to engage much more closely with the IBM Global Services teams to do this. But among the areas where we have work which is both mature enough to be useable but fresh and exciting enough to be unique, are the general areas of auction and trading, where we can support a remarkable array of types of auctions, where we are able to move into the more general world of trade exchange, multi-way brokerage and so forth.

We can also support the dual activity of RFPs and RFQs. That's the buyer's side version of an auction, instead of a seller's side, where the buyer says, "I want something, who will give it to me," instead of, "I've got something, will you pay me for it." And we have software in both the auctions in the RFP and RFQ area that fits into the business process chain that can be used as part of regular business.

As you may know our fundamental theme for most of the IBM work is, "How do we make the future world of business-to-business interaction run better? How do we make sure they all integrate appropriately?" The integration front is, in part, represented by new work we have been doing on use of XML messaging to carry EDI and other B2B messages. We believe that this is part of a very large shift that's coming on how businesses will interact and how the future uses of EDI-like transactions will shift. We have technology for managing the XML documents, the XML messages, and also for connecting these into authentic commerce.

In addition to these technical activities, we continue to interact heavily with the university and research world. So far, in 1999, we have run a conference on the technologies underlying negotiation, a technical conference aimed at practitioners and the university researchers. We ran another invitational conference in France on the Impact of Globalization for CIOs and VP's of strategy. We held a meeting on the topic of how to gather statistics on the digital economy at the request of the US federal government. We invited several of your firms to that meeting.

We have a conference, rather an unusual one, coming in a couple of weeks on the topic of masters education in electronic commerce, where, basically, we are bringing together about 30 leading academics who are responsible for designing the new courses in e-commerce education, either MBA or specialized masters degrees. We'll discuss the plans they have to understand the opportunities and risks in curriculum design and practical experience. We'll also bring together a few people who are interested in hiring the results and some current students in the first programs to comment on these plans. That will be in two weeks.

In addition, as I mentioned, we have a new, major effort to rapidly move technology that we have invented in the laboratory into specific customer engagements, partly because that is a faster way to market than some other routes. It's also a way to understand true requirements through experimentation, and to be able to iterate several times before making something ready for a more general offering or product.

So, we are creating an internal organization in the IAC to help manage this transition of technology. This requires planning our efforts, managing the pipeline, and helping the people in IBM Global Services who either need to know about technologies that are becoming ready, or the people who are going to be implementing them in skills, so that we can bring them up to proper engagement strength, rather than an initial experiment. And, as I said, we're creating an organization to help smooth that path.

In summary, we have gotten considerable recognition and influence in the academic sphere. We are working with a number of universities on specific projects. We are eagerly trying to recruit, as everyone else is in this field. And those are all offshoots of our main effort, which is to truly accelerate progress in the advanced commerce area to make sure that all the parts of IBM are energized by the high-end opportunities, and also to try to create and move technology much more quickly than would otherwise be possible by taking advantage of IBM's enormous development and engagement capabilities.

QUESTIONS AND ANSWERS

1. How does IBM's advanced commerce efforts compare to other vendors?

Stu: Let me mention one of the projects that we are doing. We have a project underway to enable people to understand, at a merchandising marketing level, what is going on a modern complex site. This is a daunting task because the basic information in the logs is insufficient to do the job correctly. And what a merchandiser wants to know is not how are the click-throughs happening but also the buy-throughs and the merchandise returns related. So we have a project to bring together the multiple streams of business relevant information, including the very hard part about understanding what's going on a site with dynamic page creation, dynamic business opportunities like promotions, and then combine that information with information of the demographic and the customer buying behavior.

I believe what is unique is bringing those together and trying to present the information in a form that is comprehensible to a marketing person, not a Web master. And this last part is, of course, a major challenge on top of the data analysis part. I think that's the key difference between our efforts and the number of relatively simple tools that are out there.

2. Are you using the IAC's expanded role to be more public than in the past?

Stu: We had a large IT analyst call-in nine months ago and we have met with some of your firms individually, so this is simply a progress report, a reminder that we are active and becoming more active. We're very proud of the progress we're making and our expanded role, now doing both deep research and rapid technology insertion. We can discuss holding individual firm briefings for more specifics on technologies that represent good instances of the theories we've mentioned.

3. In addition to now leveraging IBM Global Services, will you also work with other software vendors, like e-marketplace software vendors, to bundle your technology into their apps?

Stu: We are very interested in working with companies on sharing and growing the platform, taking advantage of their capabilities and ours and joint activities. At the moment, there are no specific relationships that I'm prepared to discuss. But our interest is not in simply selling specific technologies, but rather creating a more rounded capability suite.

4. What work are you doing in business-to-business buying agents? I noticed you have a technical white paper on it on your web site.

Stu: We have a number of cuts on this very important problem. First of all, we have both theoretical and analytic work on the behavior of markets where there are shopping robots; how the robots, themselves, can learn how the sites and/or the sellers will behave in them. In addition, we have considerable work on the auction front on different types of bids, order bids and others, which need to be managed, and then we are looking into how to open the interfaces for the ordinary business sites and for the trading sites for inter-computer and inter-agent access, not just clicking on the Web screen.

We're working on how you're going to do this reliably, securely, how you restrict access from the ones you don't want to deal with or ones you are starting to worry about. That gets into authentication. It gets into classic security.

These are concerns we are pursuing as we evolve our platform and our more theoretical research.

5. Are you involved in e-mail, electric order retention, the paper trail, and the legal ramifications of on-line selling?

Stu: There are several issues that I think you're touching on. Please correct me if I'm not answering the right question.

But first of all, there is the question of getting appropriately legal documents, which means having proper signature, probably proper attention practices. And we are worrying very much about some of those problems in our platform work. How do you capture the right documents? How do you manage the trail of audits? How do you appropriately sign and encrypt the relevant parts of documents so that there's no question about who received what, who sent what.

We've had separate interesting research efforts in our Zurich labs on some of the more theoretical questions of what documents, precisely, must you preserve, what information is required for being able to adjudicate any disputes later. And that's a fascinating study of its own.

We're also very concerned about how do you make some of this seriously secure, rather than a little secure. So, we have pursued use of secure co-processors. IBM has its own tamper-proof hardware, which is very good. There are, of course, other such products on the market. How do you utilize those to increase the overall security of the flow that you've got? How do you capture and genuinely keep track of the relevant information? And we have work relating to all of these things I've just mentioned, which are attacking the transition from e-commerce as experimental to e-commerce as standard and ordinary real business.

We are also worrying about the whole issue of tracking documents that are part of e-commerce transactions. And a part of that is the security inscription signature issue so that you can validate that it's a proper document. But we're also attacking at a more fundamental level the document flow problems and the work-flow problems to ensure that you that you really do know what you're doing and can show that you were doing it.

This requires a principled approach to how you manage documents no matter how they show up, whether it's e-mail, whether it's Web click in form, whether it's old EDI, whether it's new EDI. And we're very concerned about getting a framework in which all of those flows behave appropriately and together, and then in a way that you can utilize for legally bound business.

We don't have a white paper on this yet, but we'll almost certainly add something on generic document management and control for e-business over the next some months.

6. Can you give us more information about the applied economics program you're putting in place?

Stu: Yes. We have hired several people from academia and we've outfitted a classic experimental economics laboratory; one in which you can run competitive experiments: buying behavior, bidding behavior. This is a brand-new effort.

I'm expecting that a number of the their papers will go on the IAC Web site.

There will be specific efforts that will tie in our other research efforts on the technology side. We are expecting to get useful input from their studies on auction and negotiation behaviors, for example. They will also be running special case studies with individual customers to help them guide their use of new technology.

7. Who is invited to the e-business MBA curriculum conference?

Stu: It is invitational to the deans and people who are defining these programs. The people who are coming are deans, or very senior faculty from Maryland, Carnegie-Mellon, Indiana, Bentley, Wharton, North Carolina, etc.