HERE COMES THE PAYOFF FROM PCs New network software lets brainstormers around a table all ''talk'' at once on their keyboards. The result: measurable productivity gains from desktop computing.
By David Kirkpatrick REPORTER ASSOCIATE Stephanie Losee

(FORTUNE Magazine) – EVER BEEN in a meeting where ideas start flowing so fast everybody wants to talk at once? Boeing and other companies have found a radical new way to harness that creative energy. Their brainstormers still sit around a table, but instead of shouting, they type their thoughts on networked personal computers using a new kind of software that keeps track of what everyone has to say. Participants can sift through far more material and act faster than they could in an ordinary meeting. In fact, after years of complaints that investment in desktop computing doesn't pay off in productivity, this new software -- called groupware -- has produced dramatic results. Boeing has cut the time needed to complete a wide range of team projects by an average of 91%, or to one-tenth of what similar work took in the past. In one case last summer, a group of engineers, designers, machinists, and manufacturing managers used TeamFocus software from IBM to design a standardized control system for complex machine tools in several plants. Managers say such a job normally would take more than a year. With 15 electronic meetings, it was done in 35 days. Boeing's data come from the largest and most rigorous study yet of the cost- saving impact of groupware -- computer software explicitly designed to support the collective work of teams. Productivity gains around a conference table have so far been most obvious. But groupware's ultimate promise is larger -- linking departments, or colleagues in different locations, or even entire corporations in ways that vastly improve the efficiency and speed of collaborative projects. The software has piqued the interest of many company problem solvers because the typical American manager spends 30% to 70% of the day in meetings. The setup that Boeing and others are finding so successful seems absurd at first: a conventional conference room with a computer at every place. ''Why can't we just look each other in the eye and talk?'' you wonder. The answer: because you seldom elicit all the best ideas, and many potentially valuable contributors remain silent. In many meetings, 20% of the people do 80% of the talking. Those who are shy, junior, intimidated, or just too polite typically shut up. Meeting software uses several techniques to loosen the lips of the silent majority. Everyone speaks at once, via the keyboard. (In most cases, plenty of out-loud interaction happens too.) As you type in your ideas and comments ( -- hunt and peck is okay -- they accumulate on your screen alongside everyone else's. Most people can read much faster than they can listen, so they can deal with far more material in a given period. Says Jay Nunamaker, who helped pioneer the concept at the University of Arizona in the early 1980s and is now CEO of Ventana Corp., a Tucson firm that markets systems based on his work: ''In a typical hour-long meeting of 15 people, everybody's got an average of only four minutes of air time. With computer support, everybody's got the potential to talk for 60 minutes. That's a big increase in productivity.'' Also important, most systems keep the author of a given comment anonymous. That can be a powerful incentive to speak. Go ahead and disagree with your boss. He won't know it was you. Explains a market researcher at a FORTUNE 500 company who has begun conducting all meetings electronically: ''It's generally unacceptable in a culture like ours to say your most private thoughts on a matter. You might be embarrassed or considered silly. But once a thought is on the screen it becomes something to be seriously considered by the group, and otherwise secret thoughts can be very useful. The processes of the mind become open to the group.'' The software uses a voting system, again anonymous, to rate ideas. Groupware is already having a major impact on companies willing to move toward the new form of organization futurist Alvin Toffler calls ''ad- hocracy,'' in which individuals decide what needs to be done and form teams to do it. These pioneers -- which include Boeing, Dell Computer, GM Europe, IBM, Marriott, MCI Communications, J.P. Morgan, Pacific Gas & Electric, Price Waterhouse, Southern New England Telecommunications, and Texaco -- are using technology to push toward flatter, faster, more team-focused organizations. Proponents believe in what could be called the democratization of data: the flow of knowledge to wherever it is needed. Groupware enables team members to stay abreast of one another's progress whether they are in a meeting room or scattered at PC keyboards from Boston to Bangkok. Companies can more quickly find connections among disparate pieces of information and disparate people whose expertise might otherwise be overlooked. Many of these companies use a unique product from Lotus Development called Notes, which Robert Johansen, a senior fellow at the Institute for the Future in Menlo Park, California, calls ''the bellwether groupware product out there.'' Introduced in late 1989, Notes is starting to show how the remarkable possibilities of groupware go well beyond meetings. Users type into the system vast amounts of their written work, which creates a set of databases that can be organized and searched in whatever way a user finds most convenient. Price Waterhouse was Lotus's first Notes customer and now has 9,000 employees hooked up (see box). Sheldon Laube, who has responsibility for all technology in the accounting and consulting firm's U.S. operations, required virtually everyone to have a PC powerful enough to handle the Notes network. Says he: ''This is a revolutionary piece of software that will change the way people think about computers.'' In many companies, leaders of teams trying to improve customer service have been among the first to embrace groupware. Technology consultants at Boeing used TeamFocus to better identify their customers' needs and to set a strategic direction for themselves. They estimated the process would normally have taken six weeks but with the help of two half-day electronic meetings was finished in one. At Marriott, human resources executive Carl Di Pietro started using meeting software five months ago. He has run meetings for groups from all across the company, and his enthusiasm is boundless: ''In my 30 years, it's the most revolutionary thing I've seen for improving the quality and productivity of meetings. It gets you closer to the truth.'' A group is able to reach a genuine consensus, he says, and members leave much more committed to decisions than they would have been with conventional methods. By definition groupware requires groups of PC users wired into a network. That knitting together is happening so fast in the Nineties that Steve Jobs of Next Computer suggests rechristening the machines ''interpersonal computers.'' Already 38% of corporate PCs are tied into networks, many spanning whole companies. Computer networks not only connect machines but also make employees feel connected to the organization. Researchers find that electronic mail users are more likely to feel committed to their jobs than do the unplugged. No similar data yet exist for groupware, but anecdotal evidence so far suggests it creates an even more powerful sense of belonging. Managers have been frustrated for years by their inability to prove that office computing increases productivity. Morgan Stanley senior economist Stephen Roach flatly asserts that there has been no productivity payoff. His primary evidence: While service companies spent about $800 billion on information technology in the past decade, service productivity growth over that period has been a measly 0.7%. One problem, Roach says, is that service companies have not made the staff reductions that the new hardware should have made possible. Others make a similar point about manufacturing. Economist Gary Loveman at the Harvard business school studied comprehensive five-year cost and productivity data for 60 large manufacturing enterprises and found no evidence that information technology improved productivity. Neither Roach nor Loveman thinks computers are the fundamental problem. ''I don't blame the machines,'' says Roach. ''It's a managerial problem. Call it ineptitude. They haven't had the guts to trade machines for bodies.'' Loveman concurs: ''I don't think most organizations have thought about what information does to authority, job structures, decision-making, and allocation of people's time.'' LOTUS CEO Jim Manzi agrees that evidence of productivity gains is paltry -- so far. ''Nobody can demonstrate a return on investment for stand-alone computing,'' he says. (By contrast, CEO Bill Gates of Microsoft argues that productivity gains do exist but are just extremely difficult to measure.) Manzi thinks progress will come with groupware. Says he: ''We think productivity can be improved if we use work group computing to integrate people into team-based organizations.'' He adds that Notes demonstrates the difference between ''information processing'' and ''information sharing.'' IBM was the first company to install an electronic meeting room in a real business situation -- a manufacturing and development facility in Owego, New York. A team from the University of Arizona led by Nunamaker designed the software and in the fall of 1987 visited Owego to measure its impact. They found that meeting time was cut by 56%. Subsequent research by IBM itself at a corporate administrative center found similar results. Boeing's study late last year is the most comprehensive follow-up to the IBM research. It closely replicated the Owego results with a larger sample over a longer period. It also demonstrated cost benefits for the first time. Boeing studied 64 meetings with 1,000 participants, tracking what managers did compared with what they said they would have done without the software. Boeing saved an average of $6,700 per meeting, mainly in employee time. Says TeamFocus project manager Brad Quinn Post, who ran the study: ''The data show there are very clear opportunities to use these products to significantly improve business processes, to make our work cheaper, faster, and better.'' In 1989, IBM signed a licensing agreement with Nunamaker's Ventana that allowed Big Blue to install more meeting rooms in its own offices and to sell the software to outside clients. IBM now has more than 50 such rooms all over the world. It rents some to outsiders for $2,000 to $7,000 a day, and will license its TeamFocus software -- a version of Ventana's system -- for one meeting room for $50,000. Ventana charges $25,000 to license its product, called GroupSystems.

One other program is on the market: VisionQuest, developed by tiny Collaborative Technologies of Austin, Texas. IBM has deliberately proceeded slowly, wanting to establish TeamFocus internally and refine the software before pushing it hard on customers. Collaborative Technologies, on the other hand, recently reorganized in order to market its product more aggressively. The company sells a VisionQuest license for $29,000. All three are elegantly designed and user-friendly. Collaborative Technologies has taken the simplest path: It requires no equipment other than a network of PCs. The competing systems designed and sold by Ventana and licensed to IBM add a big display screen at the front of the room. While a professional meeting facilitator is helpful at any electronic meeting, Ventana and IBM virtually require one. That makes their systems costlier to operate, though they do offer a wider range of features, including a way for groups to collaborate on writing letters or documents. Some gleanings from the experience of companies already seriously committed to groupware: -- At Marriott's Bethesda, Maryland, headquarters recently, seven executives from one of the company's large Washington-area hotels sat in a room full of PCs equipped with VisionQuest. None had ever taken part in an electronic meeting. A sign at the front warned: ''Enter this room ONLY if you believe the ideas and opinions of others have value.'' Their challenge was to find new ways to improve guest satisfaction. After a lot of laughing and a few silly suggestions on screen, the room went silent. Occasionally someone left briefly. The hotel's general manager ate a cookie. After 25 minutes, the group had generated 139 ideas. Then they rated them on a scale of one to five: once according to the likely impact of each idea on guests, and again according to what each would probably cost. A consensus emerged that, among other things, more thorough training of hotel employees was essential. -- A market researcher, who asked not to be identified because he doesn't want his competition to start using groupware, has been running all his meetings with VisionQuest for six months. They typically include scientists, product developers, sales and marketing people, and often ad agency staffers. Says he: ''While I thought I was a good facilitator, I'm convinced I was actually missing about 75% of the information I could have got out on the table.'' He installed the software in a room his company had designed for PC training, where 15 networked PCs often sat unused. -- Southern New England Telecommunications installed IBM's TeamFocus in an electronic meeting room in its New Haven, Connecticut, headquarters in June 1990 and has just added a second. The company used the rooms to develop a new customer relations strategy in seven weeks that it figures would have taken about a year using focus groups or surveys of employees who deal with the public.

-- J.P. Morgan installed a handsomely appointed 13-seat room equipped with TeamFocus last March. Since then it has been in almost constant use for meetings devoted to strategic planning, organizational changes, auditing, and employee surveys, among other subjects. Morgan will soon install TeamFocus rooms in its Wilmington, Delaware, and London offices. Says Lynn Reed, a vice president in Morgan's global technology and operations group: ''The software works best for a meeting that is going to take more than an hour and that is intended to achieve a group decision. It's not beneficial for status-checking meetings, where each participant has to give a report, or for meetings with a single speaker.'' -- Dell Computer started using VisionQuest last May for strategic planning meetings. The company found it could include more people in the process and still finish faster. Says Bruce Ezell, manager of business development: ''That went so well we've started using it for any type of project that requires groups of people to work together -- like product planning and developing marketing strategies.'' In one case, Dell used the system to name a new product. In the past, names were developed by asking product team members to send in suggestions by electronic mail. Then meetings were called to consider lists of names on flip charts. ''Whoever screamed loudest would be heard,'' says Ezell. ''It was still up to the product manager to make a decision, but there was no way to get consensus.'' With VisionQuest, a group of marketing and sales managers met for two hours, proposed and rated 75 names, and reduced them to five finalists. It would have taken two months to get there the old way. Ezell says groupware is a natural for Dell since everyone in the company has good computer skills. More important, the PC industry is experiencing brutal price cutting and going through faster technological change than perhaps any other industry in history. Says Ezell: ''When we detect a major change in the market, we need to pull our management team together immediately. We can't tolerate meetings that hash things out all day and end without consensus.'' Strategic planning meetings that used to last two days now take four hours. Di Pietro of Marriott is convinced that meeting software can also enhance cultural diversity, a company priority. ''It's a room of nondiscrimination,'' he says. ''You don't know if that idea you're reading comes from a woman or a man, part of the minority or majority, or a senior or junior person. People begin to say, 'Hey, we've got a lot in common with each other.' '' Many experts caution, however, that a repressive boss or a dysfunctional group will probably remain so with or without electronic help. Says Bob Bostrom, who teaches at the University of Georgia and consults with companies on using meeting software: ''The technology doesn't make people equal in terms of power but in terms of being heard.'' Some bosses defeat its purpose by walking around the room glaring at people's terminals or loudly bullying everyone to put in ideas that resemble their own, says Gerardine DeSanctis, a professor of information systems at the University of Minnesota. ''The group has to decide it wants to get more out of meetings,'' she observes. ''It's like an alcoholic has to want to stop drinking.'' The next step is to enable people to meet without being in the same room -- or even the same city. The three meeting software products are all designed to work among distant participants, and a few companies, including Dell Computer, are already reporting early success with this approach. Nunamaker, however, says his research has found obstacles. Without the nonverbal cues and other stimuli that come from seeing others in the same room engaged in a common task, people's attention easily wanders. Groupware has other potential drawbacks. Notes, for example, may prove threatening to some managers because employees can independently identify and connect with others working on similar tasks. These new working relationships may improve efficiency, but they may also upset organizational hierarchies. Says Natasha Krol, an analyst at the Meta Group, a Westport, Connecticut, consulting firm: ''You can start your own subculture in Notes. Managers often have very little to do with that, and the process may even help identify which managerial layers are obsolete.'' THE FLIP SIDE of Notes is that putting so much employee activity on the network gives management the potential to monitor exactly what is going on in the organization. At Price Waterhouse, some departments use Notes as a kind of electronic filing cabinet, with all written documents inserted in the database. The boss can see every memo anybody writes. Some new types of groupware on the horizon could increase management control still further. Later this year NCR expects to release an enhancement to Cooperation, its program that ties together office activities now conducted on different computer systems from PCs to mainframes. The new feature can, among other things, keep track of documents that must be passed from person to person for processing. It will alert managers to logjams or other inefficiencies. The payoff from groupware could be huge. John Oltman, CEO of SHL Systemhouse, a large Ottawa firm that manages computer systems for clients, predicts that some big insurance companies could reduce their claims- processing work force by as much as 50% over the next five years. Groupware that allows teams to communicate using video will open entirely new productivity horizons. Researchers are already working on various ways to conduct what they call ''virtual meetings,'' in which videoscreens would allow people in various places to interact as if they were face to face. Jay Nunamaker has a plan that calls for groups of four people to sit at terminals in front of giant screens in four different rooms. The screens create the illusion that all 16 participants are in the same room. At AT&T Bell Laboratories, researcher Sid Ahuja is working on a way to accomplish the same thing from individual offices. His system would display live video images of each participant on a desktop terminal, and allow them to share software, graphics, and other data as easily as if they were all together. IF GROUPWARE really makes a difference in productivity long term, the very definition of an office may change. You will be able to work efficiently as a member of a group wherever you have your computer. As computers become smaller and more powerful, that will mean anywhere. Paul Saffo, a researcher at the Institute for the Future, thinks networked computing may well lead to drastic population dispersal. Says he: ''For the first three-quarters of the century our cities were shaped by developments in transportation and telecommunications, but now the influence is shifting to computers and communications.'' And all we really wanted was a little boost in productivity.