Retrospective: Technology Lessons from the Dot.Com Era

By Steven R. Bergman

Part 1: The Bust

One of the lesser remarked-upon characteristics of the Dot.Com Era (DCE) was the frenzied push by virtually the entire telecommunications industry to make customers replace almost everything that had ever been installed by virtually the entire telecommunications industry . The most common claim was, in effect, that if you didn’t remake your company today (using our new IP and VoIP technology and products, of course) you wouldn’t be able to compete tomorrow.

To the contrary, the truth was that most of the telecommunications technology in place at the beginning of 2000 was relatively new or recently upgraded for Y2K compatibility reasons. It also not only worked, and worked well, but it also cost less and was more far more reliable than the new Internet Protocol-based (IP) technology being hawked to replace it.

Another truth is that there was no massive shift to IP going on, just as the amount of traffic on the Internet wasn’t doubling every week or month. The only significant drive toward new technology was by technology companies with vested interest in a changed scenario outcome abetted by technology magazines and related media frantic for something to fill their pages and produce advertising revenue.

During the boom, the Telecom and IT industries were consecutively fueled by the exaggerated fears of Y2K catastrophe coupled with the subsequent irrational exuberance of the era. When the marketing hot air balloon encountered the twin pinpricks of oversupply and inadequate demand, the bubble burst, and recession in the IT space and elsewhere ensued.

Part 2: The Lessons

Lesson 1: No new tricks, only new dogs. managers didn't understand the purpose and value of older technology or, often, even the technology itself.

Lesson 2: Business is about people, not technology. It's about satisfying individual needs within the context of meeting corporate objectives and reinforcing relationships among all constituencies: employees, customers, suppliers, strategic partners, etc. Too many dot.coms tried to take the individual out of the equation and attempted to replace it with enhanced technology.

They forgot or never learned that technology per se is never the objective. It’s rarely even very important. What is critically important, though, is what a technology does for individuals or groups of individuals. That basic truth unfortunately became lost in the rush of madness.

Lesson 3: As always, a business should base its decisions on what it needs, and not on what’s available or being touted in the marketplace.

Companies should add technology incrementally. Business Analysis, Automation, computerization, even Business Process Reviewing or Re-Engineering, none of these inherently require wholesale replacement or a re-start from square one.

Lesson 4: A serious fallacy widely associated with the DCE was the belief that taking time to plan almost anything was a serious mistake. One would fall behind one’s competitors and never catch up.

The need not to over plan may be valid at times in specific areas of highly competitive market and product development. The critical mistake many era mangers made was to also apply it to infrastructural buildup and deployment. So, the belief was not completely wrong. What was completely wrong was to apply it indiscriminately.


Part 3: Why the Telecom Balloon Burst So Loudly

The balloon exploded due to a unique confluence of factors:

  • Multitudes of inexperienced managers being placed in charge of new ventures and new IP and VoIP technologies.
  • Internet-oriented media and telecom companies molded their messages and stories specifically for these new managers.
  • The widespread disappearance of the old guard, both experienced business executives with P&L responsibilities and experienced operations and telecom managers.

The latter, especially, paved the way for their own demise because they had put in much effort (and overtime) getting infrastructure in place before January 2000 to avoid potential Y2K problems. Afterwards, with all upgraded or new systems in place, there was relatively little for telecom managers, especially, to do. Many were also at the top of their pay scales, and so they were encouraged - especially as the recession took hold - to retire in favor of younger persons who "got it", and who, not so coincidentally, didn't cost nearly as much and who also had lower health costs.

One inadvertent result of this was that the older employees who knew the existing equipment and what it could do (and even what it could do that newer systems couldn't, despite vendor assurances to the contrary) were nowhere to be heard in the great technology replacement debates that ensued.

Another less accidental result was that telecom companies (and datacom companies new to telecom such as Cisco and 3Com) were able to create IP and VoIP technology-based telecom myths that made complete sense to a new generation of IT managers who viewed everything from a data context.

Such managers had no historical perspective regarding the capabilities and reliability of the billions of dollars worth of existing telecom infrastructure that they cavalierly dismissed as "Legacy". It was the high cost of replacing such equipment and the near-impossibility of justifying its expense to prudent financial mangers who also didn't just "get" it that slowed the dot.boom to a crawl. Once the early adopters who had capitulated to the pressure to go "VoIP" at any cost encountered difficulties with the first generation of IP product, the inevitable reaction among other large companies to slow down until the products really proved themselves finally caused the momentum of the telecom part of the balloon to collapse and fatally implode.

Part 4: The Aftermath and the Resolution

 Historically, throughout the 20th century, multiple levels of management were responsible for business processes, business systems, employee productivity, and employee satisfaction. The dot-boom-dot-bust that began the 21st century eliminated entire levels of such management, and effectively transferred the responsibility for all systems and procedures to IT, but not responsibility for employee satisfaction or productivity.

The outcome has generally been more efficient IT system procurement, but also, unsurprisingly, what has been perceived as ineffective IT responsiveness to the needs of office employees. Unfortunately, in many companies, the inability of IT and business unit staffers to understand each other's needs has resulted in both personnel and communications systems that simply fail to communicate.

In a formal IT-directed dotted-line-relationship-only environment, where the real need to address both personal business requirements and the interpersonal aspects of business relationships remain unsatisfied, what invariably occurs is the creation and perpetuation of workarounds, frustration, low morale and low productivity.

The key to resolving this impasse lies with properly created systems and processes that create cohesiveness within and among business units by effectively formalizing the importance of non-dotted line relationships among individuals.

For a full treatment of this subject, please read about the Teleconvergence approach to the IT-Business Unit Divide.