Ibm Takes Notes Of Future Lotus Software Lowers Barriers Between Different Computers

US West Inc., under pressure last year to improve customer service, got several thousand employees in 14 states talking about how to do things better.

People chipped in ideas whenever they struck, in the office, at home or even on the road, forming a continuous conference through their computers. It didn’t matter what computer or even what extra software, such as graphics or spreadsheet programs, they used to illustrate their points.

They were united by Lotus Notes, a program that improves the sharing of data by eliminating the barriers between different kinds of computers and software.

Still modest in sales, Lotus Notes is becoming more important to companies of all sizes, allowing them to monitor and use data more efficiently.

That’s why IBM, the world’s largest computer company, has launched a $3.3 billion hostile takeover bid for Lotus Development Corp.

“It’s clear to me and many others that the industry is entering a new phase, in which all the computing power is linked together,” Louis V. Gerstner Jr., IBM’s chairman and chief executive, said when the buyout was announced Monday.

The rise of Notes comes as more companies get work done through groups that cross departmental lines or other boundaries.

“Lotus Notes is the first product in the market to really address the needs of work groups that need to collaborate on information,” said Bob Flanagan, an analyst with Yankee Group, a Boston research concern.

Notes is used at the White House and most of the nation’s big accounting firms. General Motors will soon have Notes used by 45,000 people and, by year-end, nearly every business will have access to it on AT&T’s phone network.

Notes is not a typical PC program that does just one thing.

Besides bulletin board-like conferencing, Notes can handle regular electronic mail and store and ship elements of documents, such as a picture or spreadsheet chart.

More important, Notes is what’s known as an “environment” that companies can customize for their own purposes.

Like the foundation of a house, many things can be built on top of it. The programs and databases US West built from Notes are different from those by Price Waterhouse, just as a foundation can support many kitchen or living room designs.

“It has a dramatic ability to change organizations,” said Carter Lusher, a vice president of the Gartner Group, a technology advisory firm. “It can blow apart hierarchies and let crossdepartment teams come together for a short period of time and then disperse.”

At US West, product information or even the day’s news are automatically routed to employees or electronic discussion forums. Individual offices buy computers and software, but technicians in the computer department keep track through Notes to spot patterns and inefficiencies.

“It flattens the hierarchical structure of the organization,” said John Schulz, a senior product manager in US West’s computer operations department.

A software engineer named Raymond Ozzie pitched the idea for Notes to Lotus more than a decade ago. Mitchell Kapor, then Lotus chief executive, hired Ozzie to work on a spreadsheet product. After that was done, Kapor gave Ozzie seed money to start a company and develop Notes.

Lotus began selling the first version in 1989. Sales did not take off until 1993, however, and Lotus executives have since come to view it as key to the company’s future. Last year, Ozzie’s Iris Associates became a wholly owned subsidiary of Lotus.

The product now has more than 1.5 million users. Notes and an e-mail product called cc:Mail accounted for about $350 million of Lotus $971 million 1994 revenue and will represent more than half this year’s sales. A typical version of Notes costs about $500.

Several competitors have emerged for Lotus Notes, notably Collabra Software Inc. and ICL-Teamware. Analysts say neither company’s product has as many features as Notes. Oracle Corp., Novell Inc. and Microsoft Corp. are still developing their own versions of Notes.

For all the software suppliers, however, the Internet’s World Wide Web may pose a challenge. Some companies may use the Web’s features, which include the ability to link documents, internal to their computer systems without connecting to the Internet.

To do so, they may turn to programs by Internet-related firms such as Netscape Communications Corp., said Paul Callahan, analyst at Forrester Research.

IBM launched a hostile tender offer of $60 per share for all of Lotus’s outstanding shares on Tuesday.

Officials from both companies met Thursday in New York, but neither would acknowledge that negotiations were under way.