Customer Service, Profit, and the Internet
Daniel Lemkow
Director, Product Management,SHL VISION* Solutions
50 O’Connor Street, Suite 501, Ottawa, Ontario KIP 6L2, Canada
Abstract
The goal of every organization today is improved customer service-but how? While telephoning or
visiting a customer site used to suflice, today the Internet is leading the way in providing seemingly
unlimited extra value to AM/FM implementations.
This paper explores what kind of information can be provided via the Internet, what is feasible, and how
organizations can profit from this exciting technological innovation.
Background
Before the utilities and telecommunications industries were deregulated, competition did not play a major
role in defining customer service policy. In a competitive marke~ however, quality customer service is
paramount and has a two-fold effect on profitability: first, in successfully retaining existing customers,
which amounts to retaining an annuity, and second, in attracting new customers.
Today the Internet is already an important medium for saving and communicating with customers.
Tomorrow Internet-based applications and services will directly affect how utilities and telecommunications
companies deliver competitive, profitable customer service. Let’s step back now and review the Intemet’s
evolution as a market.
The Internet: An Emerging Mainstream Market
The Intemet is growing fast. As a consumer service, it is growing more rapidly than microwave ovens,
cable TV, or VCRs. As a business tool, it is growing faster than fax machines or cellular phones. It is
estimated that the Intemet has been growing at about 100% per year since 1988’. In 1996, an estimated
7.7% of US adults regularly used the World Wide Web (WWW)**.This figure is significant in that Web
technology was limited to scattered university and experimental users just three years ago. To help
understand this mrwke6we will examine its key forces of supply and demand.
Residential Internet Market
The residential Internet mmket is developing rapidly, and accessing the Intemet is a key motivation for
purchasing home computers. High-speed modems are standard equipment on most new computers. Indeed,
many computer retailers have begun bundling Intemet service with new computers. Further, the profde of
Intemet users is broadening across age, sex, ethnic, and income lines. Even users without prior interest in
*Source Matrix Informationand DirectoryServices,Inc.
**Source:Boston Globe,6/30/96, p. 74, citing ForresterResearch
computer technology are entering the market driven by their pursuit of special-interest content on the
Internet. The residential Intemet market represents a substantial target for deregulated utilities and
telecommunications providers. The use of the Intemet in public schools, colleges, and universities also
continues to entice new users.
Commercial Internet Market
The commercial Intemet market is growing possibly even more rapidly than the residential market. In
addition to using the Intemet for external purposes, such as public relations and electronic commerce, large
organizations are aggressively adopting Intemet standards to maximize their investment in information
technology. Intemet-based email has largely replaced proprietary email. Intemet cammmication protocols
are replacing proprietary local and wide area network operating systems. WWW standards implemented in
internal networks (see “Intranets” in Table 1) are beginning to challenge traditional client/server
applications and markets, fueled in part by the introduction of RDBMSS and application development tools
based on Intemet standards. As of September 1996, more than 572,000 companies had registered domain
names with INTERNIC Registration Services.
Electronic commerce, involving secure transactions over the Intemet, is widely predicted to explode within
the next few years. All major credit card vendors, banks, retailers, and the computer industry are
aggressively developing the technology to make commercial transactions over the Intemet as commonplace
and secure as shopping by catalogs. Electronic Data Interchange (EDI), a major form of electronic
commerce between large corporations since the mid 1980s, is being extended to operate over the Intemet as
it has since the mid- 1980s over private networks. The estimated tQtalvolume of sales generated over the
WWW in 1995 was US$436 million, and, with the widespread adoption of electronic commerce, this figure
is projected to grow to US$46 billion in 1998.*
Internet Service Providers
Intemet service providers (ISPS) are reaching competitive market status. ISPS come in many flavors-small
lorxilfirms, national fins, and, increasingly, large telecommunications companies. The Intemet access
market is estimated at US$2.5 billion in 1997**.The number of ISPS worldwide as of July 1996 was
3,054.8””
Now we will briefly review the key technologies that are enabling this emerging market.
*Source: ActivMedia.
**Source: Maloff Co. report, cited in Web Week, 6/3/96, p. 50.
““ Source Mecldermedia
Key Internet Technologies
End-User Application
From an end-user perspective, by far the most pervasive and compelling Intemet applications are email and
the World Wide Web (WWW or “the Web”). Intemet email provides for direct textual* communication on
a one-to-one or one-to-many basis. The WWW provides for the display of rich tex~ graphic, even
multimedia information. These two applications are driving the Intemet’s rapid market growth today.
Together, and at their current state of technological evolution, these technologies are sufficiently mature for
utilities and telecommunications companies to implement the potential customer service applications
outlined in the Global Intemet column in Table 1.
World Wide Web-The Ultimate Client/Server Svstem
The most dominant of the standard Intemet applications is the World Wide Web. The WWW can be
thought of as a clientlserver system that serves the world. The servers, called Web servers, provide
information services to clients called browsers. Connecting the two is a universally accepted standard called
the Hypeffext Transfer Protocol (H1’TP)across which information, encoded in the HyperText Markup
Language (HTML), is moved. Numerous companies provide browsers**and Web server products.
A key advantage of the Web is that client browsers are available for all major desktop computing platforms
(Windows, Macintosh, and UNIX)---true open computing.
Browsers and Web servers directly interpret HTML, which includes text and images, but not spatial
information. Both browsers and Web servers can be extended, however, to provide specialized
functionality.
Browsers are extended with ‘plug-ins,’ while Web servers can be extended with specialized servers and act
as a conduit back to the browser. Web servers are connected to the specialized servers using a protocol
called the Common Gateway Interface (CGI). Browser plug-ins are written in a programming language. A
portable language such as Java makes it possible for the plug-into be used on any platform. If the browser
detects the need for a plug-in that is not already on the user’s system it automatically downloads it (usually
from the Web server). This capability significantly simplifies a utility’s work in providing Web services to
its customers.
