Special Technology Report

In the late 1980s, Rhonda Sanderson happily moved her tiny public-relations agency from downtown Chicago to suburban Highland Park. The move cut her commute from 30 minutes to about 30 seconds: she'd set up shop in an office building across the street from her home.

But a decade later, Sanderson & Associates Ltd. was growing, and Sanderson found that the top job candidates -- recent college grads -- viewed her location as a distinct drawback. Having just escaped from smallish midwestern college communities, they weren't interested in launching their careers somewhere even smaller. "They wanted to live and work in the big city," says Sanderson.

Sanderson, a single parent, didn't want to uproot her high school-age daughter to move back downtown. Instead, she bought a small building in a trendy Chicago neighborhood and moved several of her employees there. After she had satisfied everyone's lifestyle demands, Sanderson had just one nagging concern: how would she, the suburban CEO who schlepped into the city just two days a week, stay in the loop the rest of the time? "I thought, 'Will I have to call them every single minute?' " she says.

As it turns out, Sanderson does talk with her seven staffers dozens of times daily -- but without picking up the phone. Instead they chat live on-line, using a free instant-messaging (IM) program installed by an employee. Today "it's fair to say we run the whole business on IM," says Sanderson, whose company, with revenues in excess of $1 million, specializes in representing national franchises such as Meineke Discount Mufflers and Back Yard Burgers. "Every [internal] communication is by IM. Everything. This arrangement wouldn't have worked without it." There's no playing phone tag, no wondering whether somebody got that urgent E-mail message, no delaying a response to a crisis. Sanderson is never more than a few keystrokes from her Chicago employees -- as long as everyone is near a computer. "I feel much more secure handling my office this way," she says of the constant real-time contact. "I feel the need to be connected to them."

CEOs nationwide are discovering what teenagers and twentysomethings, including Sanderson's daughter and staffers, have known for years: IM is an addictively fast, simple, and cheap way to communicate. There's nothing exotic about the technology. It's basically real-time E-mail, either in-house or over the Internet. But unlike E-mail, IM is, well, instantaneous; as soon as the message writer hits "send," the message pops up on the receiver's screen. And unlike E-mail, IM doesn't generate in-box clutter. Conversations usually vanish when they're finished (although programs increasingly allow one to save them), and users, because they control their lists of authorized contacts, are less likely to receive "spam," or unsolicited messages. The best-known IM programs are free; even commercial products are relatively cheap. Although an IM conversation typically involves just two people, power users may conduct several conversations simultaneously or create a chat room where any number of users can join the discussion. With some programs, users can even swap graphics, video clips, or voice clips. And unlike any other form of communication, IM monitors physical presence. With a glance at their contact lists, users can tell who's logged on and available right now.

Even though IM began as a way for kids to pass notes electronically (see "The IM Generation," below), it's clearly becoming a vital tool in businesses. IDC, a research company based in Framingham, Mass., says that about 40% of U.S. companies already use the technology. Jupiter Media Metrix, headquartered in New York City, says nearly 17 million Americans used the largest free IM services at work in March 2002, up from 10 million in September 2000. Gartner Inc., in Stamford, Conn., calls IM "the sleeping giant of the Internet" and predicts that by next year employees at 70% of all companies will use IM for business or personal communication. By 2005, Gartner says, at least 50% of U.S. businesses will rely on IM to interact with customers -- and most consumers will use IM more frequently than they use E-mail.

Naturally, IM works best in businesses in which employees are tethered to computers. Large high-tech and telecom companies like IBM and AT&T have used the technology for years. But it's picking up speed in less likely industries. For instance, manufacturers are beginning to use IM kiosks in factories to keep managers in close contact with floor supervisors. Retailers that have been using live chat on their Web sites for the past few years are beginning to use it in-house as well. Jennifer Convertibles in Woodbury, N.Y., uses IM to communicate with managers in its 200-plus stores nationwide. Rami Abada, the chain's president and chief financial officer, says the low-cost IM network, which replaced a costly voice-mail system, has saved the company $50,000 to $60,000 a year and eliminated 7,000 calls a week that were going into voice mail.

Now smaller companies, too, are getting the message that IM is free or cheap, requires no special hardware and no training, and can even be kind of fun. (See "Instant Lingo," below.) And despite some of IM's drawbacks -- such as legitimate concerns about security and productivity -- they're finding plenty of ways to use it. For many growing companies, IM's main appeal is simply being able to reach anybody instantly -- even when both parties are already busy.

Being there: In the Chicago office of Sanderson & Associates on a hectic Friday morning in April, Kelly Templer was on the phone with a reporter. She checked her contact list to be sure Sanderson was on-line. She was. Templer opened her IM on-screen window and typed in: "I have a reporter from AP on the phone. I want him to interview Tommy about IFE [a franchise trade show], he also wants other franchise info -- what should I do?" She hit "send," and Sanderson, on another call in the Highland Park office, saw the message pop up. Sanderson immediately shot back: "Give it to him! Offer him interview with Don DeBolt or some other expert if he wants independent source. Try to get info on exhibitors to him." Neither had skipped a beat on their respective phone calls.

Bolstering virtual management: At Tax Technologies Inc., a two-year-old tax-preparation and software company, vice-president Jeff Wenger, who's based in Bradenton, Fla., uses IM to manage a team of software developers and testers scattered all over the United States. Because all IM programs indicate which users are logged on, Wenger can tell, for instance, when developer Anar Patel, in Warren, Ohio, is available and when Adrienne Morey, in Phoenix, is on-line. (Team members can, and do, converse with one another by IM all day -- and sometimes all night -- about work in progress.) Wenger says the setup allows him to hire top employees who can work and live wherever they want, "whether it's the mountains of Colorado, the beaches of Florida, or the big city." Using IM has cut his daily telephone time from three hours to less than 30 minutes. Other organizations rely on IM to stay in touch with telecommuters, road warriors, or local field staff. Companies that have overseas employees, partners, or customers may find the technology particularly cost-effective.

Managing crises: AtomicPR, a $1.9-million San Francisco high-tech PR agency that was launched in late 1999, just before the dot-com bubble burst, built real-time communications into its business model and culture. The company's 15 employees say that IM provides them with a competitive advantage in a tough economy. Today the business uses IM for both in-house and client communications, and the staffers have found it invaluable for responding rapidly to a crisis. In one case, account supervisor Mike Crusick contacted company cofounder Andy Getsey by IM at 7 a.m. on a weekday, when both were still at home, to report some bad news: a press release had just come over the wire that a client was being sued by a competitor.

Andy to Mike: Wow. I'll do a quick plan for [client], then give her a call. It'd be best to have recent real-world examples too. Can you find a few similar suits and corporate responses ASAP? Thx.

Mike: Here are links to announcements/responses in similar suit.

Andy: Thx. Can you find 2 more from different suits, too? Hurry.

Andy: PS. Would you call the rest of your team and let them know what's happening ASAP?

Andy: PSS. And tell team to hold on related media communications until we talk to [client].

Mike: Of course.

Mike: More links to difft suits.

Andy: Check :-)

Andy: Just emailed [client] 5 point plan. CC'd you and team. Calling her now.

Mike: Roger that.

Andy: Just talked with [client]. Buzzing there! Went over the key points and examples. She's going into internal meeting at 9 -- will call us immediately after. Thx for help. I'll be at office in an hour or so.

Mike: Great. I'm headed into the office now. See you there. Busy morning already :)

Instant inventory tracking: At Pacific International Marketing, a produce-trading company in Salinas, Calif., with revenues under $100 million, sales managers use IM to simultaneously alert 35 salespeople in five cities to market changes. A typical message: "Stop selling broccoli at $7; it's dropped to $6." That's a big improvement over the decidedly low-tech tradition of simply yelling across the room to local traders and then calling around to remote offices to spread the news. And, says president Tom Russell, the time savings is no small potatoes in his industry, where prices can fluctuate 100% in 24 hours and product shelf life is measured in days. As Russell puts it, "The minute we cut some product in the field, it's beginning its journey to the Dumpster." He estimates that IM has saved him thousands of dollars in phone calls -- and an untold amount in losses caused by information delays.

Kibitizing on transactions: One of IM's most practical and widespread uses in small companies is allowing behind-the-scenes collaboration. At $22-million YellowPages.com, an on-line ad directory based in Henderson, Nev., the company's 42 employees "ping," or contact one another by IM, throughout the day. "My Chicago guy is pinging me right now," Dennis Warren, senior vice-president of corporate development, says during a telephone interview. (His reply: "OTP. SB." Translation: "On the phone. Stand by, I'll get right back to you.") But the technology's real value, he says, is in letting salespeople get the answers they need. For instance, a rep who is trying to close a deal on the phone might use IM with Warren: "Can I offer her a 30% discount?" Warren can decide and reply on the spot ("Yes," or "Try 15% first") without making the employee -- or the potential customer -- wait.

At StudentUniverse, a travel service in Watertown, Mass., that caters to college-age customers, agents often use IM to send questions to a manager, aiming to get an immediate response without putting the customer on hold. Customer-service director Phil Dobbyn credits IM for helping cut his staff's average time per call by 25% in just a few months. Finacorp Securities, a bond brokerage in Newport Beach, Calif., with revenues under $5 million, uses IM for everything from telecommuting to providing tech support for its on-line arm, Tradebonds.com. But IM's greatest value is linking salespeople to the firm's compliance officers to get fast answers to regulatory questions.

Some managers own up to swapping messages with one another during conference calls with outsiders. StudentUniverse CEO Espen Odegard occasionally uses IM to confer with his cofounder or his lawyer during sticky negotiations. Other executives cue each other during calls; in fact, AtomicPR senior account manager Misha Gulak used IM with Getsey during a phone interview with Inc, reminding Getsey about a point she thought he should make.

Instant gratification, of course, comes with a price. For starters, IM, like E-mail, can transmit viruses that existing security software may not detect. (For that reason, security experts recommend using virus-scanning programs that specifically cover IM.) But because anybody can download free IM software from the Web, tech staffers may not even realize employees are using it. And IM isn't always secure, as the CEO of a now-defunct California dot-com learned when he found copies of his private messages posted on the Web. In May, Microsoft warned that its popular free IM program, MSN Messenger, contained a serious security flaw that could leave users vulnerable to computer hackers. (The company provided a free on-line "patch" to fix the problem.) With that in mind, Tax Technologies instructs users not to transmit confidential client information. StudentUniverse's messages include their own version of the surgeon general's warning: "Never give out your password or credit-card number in an instant message conversation."

Obviously, any new link to the outside creates new opportunities to leak corporate secrets. For that reason, IM programs increasingly include monitoring functions that allow companies to capture or log transmissions.

Many IM programs -- particularly the free ones -- won't work with one another, meaning that if you have only Yahoo Messenger, you can't use IM to communicate with a client who has only AOL Instant Messenger. That's exactly why the American Homeowners Foundation, a publishing and lobbying organization based in Arlington, Va., stopped using IM last year. Initially, the foundation's directors hoped to use the technology to quickly correspond with the far-flung authors who write the organization's books. But they ultimately found IM more frustrating than useful, says vice-president Chris Christensen, citing the plethora of incompatible programs. Michael Osterman, an electronic-messaging consultant in Black Diamond, Wash., predicts that the industry will adopt a common standard within the next year or two.

In addition, some people find the barrage of read-me-right-now messages annoying or disruptive. "Your attention gets very fragmented. It gets in the way of good solid thinking," says Carl Stormer, StudentUniverse's cofounder and executive vice-president. "It's almost like white noise; you don't notice it till it's gone." Other executives occasionally shut off IM or change their status to "busy" or "do not disturb."

Managers at some companies worry that employees will spend too much work time using IM to chat with pals inside and outside the company. Others -- such as StudentUniverse's Norwegian-born Odegard and Stormer, who use IM daily to correspond with their families in Norway -- view it as a perk they can offer employees, as long as personal use doesn't get out of control. They also emphasize that IM isn't the right tool for every business missive; employees should still turn to E-mail when they need a record and to the phone for the personal touch. Finally, they acknowledge that IM sometimes provides solutions to problems that don't exist. For instance, employees at StudentUniverse admit that they sometimes swap messages with nearby coworkers rather than step next door or down the hall. Stormer says, "That is like taking the elevator to the first floor."

Yet even critics recognize the technology's promise. For example, ActiveBuddy, a New York City developer of IM products, offers free homework help, stock quotes, and sports scores; the company also created IM promotions for the band Radiohead, teen singer Lindsay Pagano, and the movie The Lord of the Rings. Other companies are exploring IM's potential for real-time auctions, travel booking, technical support, and stock trading. Meanwhile, the earliest adopters remain true believers in the technology's value. "Our development team is 5 to 10 times more productive in our virtual environment than in a traditional office setting," says Tax Technologies' Wenger. "It's disruptive," says Dane Madsen, CEO of YellowPages.com. "But so was the Internet and so was E-mail. You adjust."

Anne Stuart is a senior writer at Inc.

In instant-messaging culture, spelling and grammar matter less than trading messages at the speed of a championship tennis match. So fans of IM write in standard business shorthand: FYI, ASAP, OK, thx, cc. They also rely on those annoying acronyms that hard-core E-mailers have thrown around for years: BTW (by the way), LOL (laughing out loud), TTFN (ta-ta for now). But as if it weren't telegraphic enough, business IM seems to be adapting its own code. Among the ones we found:

BRB: Be right back.

BTN/5: Be there in five (minutes); be right there.

C&B or c/b: Crash and burn.

Convo: Conversation.

G2G: Got to go.

IC: I see.

JK or j/k: Just kidding.

JW or j/w: Just wondering.

NP or n/p: No problem.

OTL: Out to lunch.

OTP: On the phone.

OTR: On the road.

Ping: To send someone an instant message ("I'll ping you later").

Pop: Ditto.

SB: Stand by (as in "just a minute").

SN: Screen name, or on-line identity.

TTYL: Talk to you later.

Most youthful IM aficionados use the technology for exactly the reason you'd expect: to converse, instantly, with everybody they know. Simultaneously.

"I have 11 windows open," Jessica Nurnberg, 15, of Oklahoma City, typed during an interview using IM. Translation: As Nurnberg answered Inc's questions at lightning speed, she was chatting with 10 other friends, swapping messages on everything from homework to hot ninth-grade gossip.

Other young IM fans cite more practical uses, such as:

Passive promotion. Kevin Colleran, 21, wouldn't dream of spamming his 200 IM buddies with ads for his on-line business, Clubvibes.com Boston, a nightclub directory. But Colleran, a Babson College senior who holds several national "young entrepreneur" titles, uses the Clubvibes logo in his buddy icon (the on-line ID badge that appears during IM sessions). That way, he raises brand awareness without raising hackles.

Real-time brainstorming. For a sociology class, Marie Aschenbrenner, 18, of Penticton, British Columbia, was assigned to a debate team taking a "pro" stance on globalization. Team members researched the issue, then met on-line the night before the debate. Working into the wee hours, they drafted and rehearsed their arguments -- entirely by IM.

Coordination of schedules. Emily Giles, 15, of East Greenwich, R.I., uses IM to quickly organize gatherings. "U can ask a bunch of people if they can do the same thing all @ the same time," she wrote in standard IM (rather than standard English) during an IM interview. "Its easier 2 keep track of who can do what n who cant."

Homework help. Casey Koppelson, 17, of Newport, R.I., sometimes uses IM for French-class assignments. If Koppelson needs the French phrase for "mow the lawn," she sends an IM inquiry to SmarterChild, a free on-line homework helper. SmarterChild instantly searches its database of information and sends back a message with the words: "fauchez la pelouse."

Matchmaking. Sarah Kornblum, 16, of Natick, Mass., uses IM to introduce friends from different towns. "They chat on here for a while and get to know each other a little bit and THEN go out on a date," she wrote. "So far it is working pretty well, if I do say so myself."

Many under age 25 can't imagine life without IM. "I really don't know what I did before," says Aschenbrenner, who had never used IM before she started college last September. Now she's so IM-dependent that when she stayed off-line for a whole day, her brother called to check on her.

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