usinesses that set up stakes on the Internet are in danger of being burned at them. Their intentions were harmless enough--they merely wanted to use the Web to learn more about their customers so that they could tailor their offerings and maximize service levels and profitability. But somewhere along the way, Web merchants became too effective at this aim and now the repercussions of their intrusive marketing efforts have come back to scorch them.
If industry doesn't take measures to placate consumers and curb online privacy infringements, the government has vowed to pass potentially prohibitive regulations. Already, companies must consider the European Community Directive on Data Protection, which, as of October 1998, will require much stricter data protection standards of any company doing business within the European border--and what company can guarantee that no European will access its Web site? Ultimately, if industry doesn't adopt privacy standards, consumers could take matters into their own hands and stop making online transactions or prevent companies from profiting from their data. The electronic commerce industry stands to miss out on as much as $6 billion in consumer revenue by 2000 if this comes to pass, according to nonprofit standards organization Truste.
"I believe that anyone who says privacy is not an issue is significantly misreading consumer perceptions," says Jeffrey F. Rayport, associate professor at Harvard Business School. "Just look at the energy behind the consumer backlash when AOL announced last year that it planned to sell the phone numbers of its millions of users.... There is widespread recognition that companies already know too much about consumers, and that issue is not going away."
The Web community is developing several self-regulatory measures to hold these converging forces at bay. In the confusing morass of acronyms, however, it's difficult to understand the distinctions between the various proposals. The following three main approaches to privacy protection work both independently of or in conjunction with the others.
Innocence by Association
The most obvious approach that companies take is to develop policies that limit what they do with consumer data and then post them online for consumers to read. The sticking point for companies here is convincing consumers they mean what they say. In 1997 Firefly Network Inc., a Cambridge, Mass.-based vendor of software that creates personalized online communities, was the first company to realize "it's better to have an audited privacy policy than just a privacy policy," says Saul Klein, Firefly's senior vice president of corporate strategy and brand. Firefly commissioned Coopers & Lybrand LLP to conduct a privacy audit of Firefly's site to verify that its practices are as good as its word. "The Web doesn't work unless people feel comfortable sharing information with others," says Klein. (See "The Business Case for Privacy,")
Since then, several organizations have formed with the sole objective of validating companies' privacy claims. The most well known is Truste, an independent nonprofit organization spun out of efforts in 1996 by nonprofit civil liberties organization Electronic Frontier Foundation (EFF) and electronic commerce industry consortium CommerceNet. The way Truste works: Companies pay between $500 and $5,000, depending on their size and the sensitivity of their information, to license a Truste logo, or "trustmark," on their Web sites.
The logo signifies that the company meets Truste's privacy requirements of disclosure and honesty. Consumers click on the Truste logo to read the company's policies and then decide whether to disclose personal information. To assure that sites are complying, Coopers & Lybrand and KPMG Peat Marwick LLP periodically review all member sites. Should Truste find that a company is breaking its word, it will prosecute. "I almost hope someone does break our rules, so we can go after them because that's what we're set up to do," says Esther Dyson, chairman of the EFF and editor of Release 1.0, a monthly newsletter about emerging information technology.
Proponents of Truste claim that if even 10 percent of online retail sites adopt it, the higher number of transactions alone could add another quarter of a billion dollars to electronic commerce this year. But this approach also has its limitations. Just because a site displays the Truste logo, it doesn't necessarily treat consumer data in a respectful, ethical manner. As long as a company adheres to its stated security policy, it can sell people's Social Security numbers and medical histories to the highest bidder. This could prove problematic for consumers who assume that the Truste logo automatically indicates ethical privacy standards and don't click on the label to read the company's actual policies. More realistically, Truste is most effective when it's just one component of an overall data protection plan.
Incremental Information: P3P
Another way of dealing with privacy infringements is to build in technological safeguards against such infringements. Cambridge, Mass.-based World Wide Web Consortium (W3C), an international industry consortium founded in 1994 to develop common protocols for the evolution of the World Wide Web, is developing the Platform for Privacy Preferences Project (P3P) communications protocol as a solution.
Future software implementations of the P3P protocol will allow users to express their privacy practices and preferences. Users will be able to state and store their preferences along with basic demographic data on their client systems, saving them from having to reenter the information multiple times when registering at Web sites. One user's profile, for example, might indicate that she doesn't mind if a site knows her e-mail address, but she wants to be asked if it wants to know her hobbies, while another user might forbid any use of his data whatsoever. As long as future users visit sites that adhere to their personal privacy preferences, they will be able to access them seamlessly. But if the site wants to gather more information than users are willing to divulge, pop-up menus will alert them and provide them with the option of exiting or choosing a lower level of privacy.
The Security Factor: OPS
While implementations of P3P will allow users to control their profile information and reach an explicit understanding about a site's data privacy practices, Open Profiling Standard (OPS) will enable the transport of this data within a privacy framework. In other words, OPS is a technical specification for the exchange of information between user and company. For example, if an online music store learns that a user enjoys jazz, OPS protects that information from inclusion in the P3P profile. That user will not inadvertently find herself on a mailing list of like-minded individuals. OPS, also under review by the same W3C working group that is working on P3P, will be incorporated into the final version of the protocol, says Klein. OPS was originally proposed in 1997 by Firefly, Netscape Communications Corp. and Verisign Inc.
Some privacy advocates criticize OPS because it enables companies to routinely and easily collect personal information. In that way, it's similar to the notorious cookie software that resides on a consumer's computer and collects data without his knowing it. But the difference, argues Dyson, is that P3P/OPS profiles are perfectly accessible and intelligible to consumers. Users have complete control over the information in their profiles. They can make it as accurate and complete--or incomplete--as they wish. Further, consumers can use OPS to track all of their transactions and what promises were made and broken by merchants. This feature should increase consumers' comfort levels about conducting online business because they can identify unethical behavior and hold the offending company accountable.
What Will Your Customers Reveal?
OPS, Truste and P3P are intended to enhance consumer privacy, but the companies backing them are betting that these technical tools will also help them get to know their customers better. The theory is that people will actually be more willing to reveal personal information if they know exactly what it is being used for. And the figures bear this out.
According to a 1997 Truste survey conducted by Louis Harris & Associates Inc. and Columbia University professor Alan F. Westin, of the 58 percent of the 1,009 users polled who have been asked to provide information at a Web site, 79 percent declined and 8 percent supplied false information. But 71 percent of those who declined or gave false information said they would've supplied requested information if they'd had a relationship with the company, and 63 percent also said they would have divulged information if the site had disclosed clearly how the information would be used. In addition, consumers will also be more willing to reveal personal information if they get some value in exchange for it, says Rayport. For instance, a user might be willing to let companies know her favorite books if it meant she could receive recommendations from an aggregated data source.
"It's paramount for any company moving into personalization technology to fulfill the promise it has made with its customer," says Susan Boster, director of marketing strategy and communication at BarnesandNoble.com, the online subsidiary of book retailer Barnes & Noble Inc., that plans to utilize both OPS and Truste. "Once we've got the privacy and trust established...then we as booksellers can give our customers the kind of customized experience similar to when a person walks into his neighborhood Barnes & Noble and the bookseller knows him by name."
Senior Writer Jennifer Bresnahan can be reached at jbresnahan@cio.com.
Keeping Track of Audio, Video
and Even Virtual Reality
The bugaboo of filing images and
multimedia could soon be banished Picture this: digital camera output, sound files, animated GIFs for your Web site, all dumped onto a server that looks like the digital equivalent of Fibber McGee's closet. (For those of you too young to remember, Fibber McGee was a radio character whose closet was such a morass that when he opened it, everything would tumble out with a tumultuous clatter.)
The rise of multimedia has triggered a big problem--keeping track of it all. Finding the right image can be as tedious as flipping through vaguely labeled 35mm slides. And we're not just talking about your last vacation--we're talking about finding the video of your CEO at the most recent stockholder's meeting, now being requested by CBS News; the virtual reality walk-through of your office building, now that you're planning to sue the architect; or even the schematics from the last 10,000 widgets your company manufactured.
In an unusual technological convergence, two new companies are tackling this same problem, generally known as media asset management. In both cases, the companies claim to have created unique algorithms in order to automatically index and categorize images, whether in video, audio or other multimedia format. Also, users can access the index through Web browsers.
Virage Inc. (www.virage.com), based in San Mateo, Calif., started shipping Media Management System at the end of last year. It consists of two pieces: Video Cataloger and Media Manager & Browser. The former acts as an automatic logging system, "watching" the multimedia and creating an index based on time coding, storyboard content and even closed-caption text. Media Manager provides Web-based access to the index. Based on configuration, the system starts at $50,000.
Magnifi Inc. (www.magnifi.com), based in Cupertino, Calif., recently began shipping its Magnifi Enterprise Server 2.0. Its components perform similar tasks, identifying media types in unstructured data within an enterprise and indexing them for access across the Web. Based on configuration, the Magnifi system starts at $20,000, although the company estimates that the price for an average-size company will be roughly $40,000, based on the number of media formats stored and the number of users.
The primary differentiation between the two: While both let users access information stored in object databases, only Virage lets users access information stored in relational databases from Oracle Corp. and Informix Software Inc. as well. The Magnifi solution runs on a Windows NT server and accesses only the information stored in the company database.
For a CIO interested in cataloguing a growing trove of multimedia files, these packages provide a much simpler way of keeping track. Conceivably, you could also use these applications to help you find that old recording of Fibber McGee opening his closet.
--Howard Baldwin
Leading Edge
Tech Support Brain Trusts
Every company wants to put its best face forward when a customer calls with questions or problems. Yet the unfortunate reality is that most companies don't have the employee resources to do so. It takes 9 months to train customer support representatives, who then stay an average of 14 months, according to research by Meta Group Inc. cited by the Molloy Group Inc. in Parsippany, N.J. But the Molloy Group's Knowledge Bridge customer support software is designed so that whoever answers the phone can easily solve the problem.
Knowledge Bridge's goal is to increase the productivity of call center operations and customer satisfaction by enabling staff to capture and leverage their knowledge across the enterprise. Using a hybrid of several self-organizing knowledge processing techniques, including neural networks and fuzzy logic, Knowledge Bridge continuously learns from users' experiences. A call center operator simply types the description of a customer's problem, and the Bridge lists the diagnosis and likely remedies. Every time the computer successfully delivers an answer to a query, it stores in its memory the steps it used to get there, thus learning to recognize different questions and answer them more effectively. Knowledge Bridge can also be used to provide how-to information, product recommendations and configuration, and scripting for telesales and telemarketing.
Knowledge Bridge manages both structured and unstructured data, such as documents, graphics, Web pages and video files. The system can run side by side with most enterprise call management applications, sharing data with those tools through standard APIs. The Knowledge Bridge client runs on PCs running Windows 95 or NT, and the server software runs on Windows NT. Knowledge Bridge connects to any relational database supporting ODBC. The price ranges from $1,500 to $3,500 per user based on the degree of customization and number of users. Contact Molloy Group at 973 540-1212 or visit www.knowledgebridge.com.
Virtual Backup
No one wants to be awakened in the middle of the night to find out that somehow the PowerPoint files the CEO is using for his presentation to the Singapore Trade Council have been corrupted. Perhaps less tragic but no less aggravating would be to find out that one of your salespeople went to Canada with an outdated version of his client's purchasing plans. Apparently the problem was that the backup was done in your time zone, not the client's. To better serve your mobile professionals, it might be time to consider Web-based virtual backup service from Seattle-based Atrieva Corp. as an adjunct to your corporation's existing backup system.
Atrieva's service is primarily aimed at individual business users, including corporate mobile professionals. When users sign up for the Atrieva service through its Web site, they can download its software to their PCs and register a password of their choice and an encryption key for secure access. The software scans users' files, encrypts and compresses them and uploads them to Atrieva's servers, where they are stored and also copied twice to tape. If a file gets corrupted when users are on the road, they can access Atrieva's Web site, enter their passwords and download the files they need. In more horrific circumstances, such as an entire hard-drive crash, a user could also rent or borrow a PC equipped with a Web browser and download the files.
Atrieva's service costs $14.95 per month for unlimited storage and unlimited access, including 24-hour technical support. Its software runs on Internet-enabled PCs running Windows 95 or Windows NT 4.0. Contact Atrieva at 206 654-5300 or visit www.atrieva.com.
Managing IT's Assets
Nobody knows better than a cio how much of a headache it is to keep track of information technology assets. Figuring out total cost of ownership, return on investment and cost accounting is no picnic. To that end, IT Ledger from NetBalance Inc. (formerly NetSolv), in Gaithersburg, Md., is designed to keep track of purchasing, financing, deployment, maintenance, downtime, human resources and disposal costs of your technology in a single decision-support package.
IT Ledger consists of five modules: A set of agents capture life-cycle costs from existing sources such as corporate financial applications and asset-inventory tools; a Java-based tool for capturing staff activity costs such as system configuration or hardware installation; an asset inventory and management application; an asset data repository; and a set of analysis and reporting tools. By continuously tracking all asset cost events in conjunction with each other, these tools are designed to reduce costs, enhance utilization of resources and enable IT staff to better manage outsourcing and departmental chargebacks.
IT Ledger's client software works on PCs running Windows 95 or Windows NT, while its server software works on servers running Windows NT only. The asset data repository requires an Oracle Corp. or Microsoft Corp. SQL Server database running on any platform. Pricing for IT Ledger starts at $40,000 for a three-user license capable of monitoring up to 1,000 desktops.
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