Improving the odds
There are a number of notable e-business success stories that can't be ignored.
Tesco, the giant English supermarket chain, played off its brick-and-mortar roots, which led to its current success with multiple online programs. "Tesco is a very capable organisation with talented managers," Freeland said. "It has an incredibly successful record of rolling out e-commerce efforts."
Involved in e-commerce since 1996, Tesco provides everything from books and brussels sprouts to bonds and insurance online. Unlike some of its American counterparts, its e-commerce strategy was to build gradually while leveraging its brick-and-mortar assets wherever possible. As an example, through Tesco.com customers can order groceries directly from their neighborhood retail store and have them delivered, an approach that quickly won the approval of store managers--who benefited from the program--and proved minimally disruptive. Today, Tesco accounts for more than 50 percent of all the online grocery sales in the UK, and has expanded its Internet-based offerings into Ireland.
Tesco played to its strength. And while there is no surefire formula for success in pursuing e-initiatives, particularly in today's dicey economic climate, I-managers can certainly improve their odds by addressing several key issues proactively.
First, e-business executives outside the information technology department can reduce political tensions within the organisation by reaching out to their counterparts in corporate IT. "The e-commerce people have seen that they need to be friendly with the information systems group to make use of the network infrastructure and databases," ART's Otis said. "The IS people have come to see that, all in all, when you're working with computers, you're all on the same team ultimately... In many companies, we've seen a gradual and natural fusion of e-commerce and IS staffs under a CIO [chief information officer] or CTO [chief technology officer]. In some of these places, it's like a baseball team with right-handed pitchers and southpaws--they're both seen for their special value and strengths, and function as members of the same team."
A case in point, Computer Task Group, an international IT services firm, just named Alex P. Alexander, an executive with e-business experience, as vice president and CIO, reporting directly to CEO Darrell Jennings, and put its entire e-business portfolio under him.
It was Alexander's understanding of Internet commerce, plus earlier experience as a regional manager at Electronic Data Systems, that served as a springboard to the new job. "The experience at EDS, where, as a regional manager, you're basically CEO of a small business, plus what I learned from the e-business side, allowed me to have the perfect fit for the CIO role," Alexander said.
In his consulting work at CTG, Alexander said he "had been working with a lot of our clients, helping them create e-business strategies and actually running their e-business operations in some instances." In this role, Alexander had a bird's-eye view of the clients' IT infrastructure, as well as those of their customers and supply partners. "That allowed me to understand that, if the internal IT infrastructure is not in order, it is going to be very difficult to make the whole e-business thing happen. That's the CIO's responsibility, but many of them were focused on point solutions and didn't have a strategic plan they could point to."
Wells Fargo, another organisation that has established a highly successful track record in launching e-business efforts, takes a centralised, integrated approach. "Wells [Fargo] has all of its Internet activities around one head, Clyde Ostler [group executive vice president of Internet Service]," said Steve Ellis, executive vice president of the Wells Fargo's Wholesale Internet Solutions Group. "We spend an enormous amount of time working with the business group heads on how we design and market the various products and how they fit into the service channel. This is a relationship business, not a technology business."
Even so, Ellis' group works closely with the bank's internal IT group in evaluating vendors and consultants it may want to use in deploying a new business initiative. In addition, the technology and business people work as a team in implementing projects. "We decided up front, with our [internal] technology partners, that we needed to build fairly rapidly and be able to work with a lot of changing technology," Ellis explained. "As a result, the business and technology people actually sit right next to each other and function as a physical, not virtual, team."
Using this approach, Wells Fargo has launched various customer-oriented e-offerings, including WellsExchange, a suite of B2B services that allow midsized and large corporate customers to perform a variety of domestic and international transactions, such as cash management and foreign exchange online. Already, 20 percent of the bank's commercial customers have signed up for the service, Ellis said. He expects that figure to be more than 50 percent by year's end.
Another way I-managers can hedge their bets is to pay close attention to shifts in the corporate wind. If I-managers haven't done so already and are managing an autonomous or semi-independent e-centre--what Forrester's Pullman calls a "dot-corp"--they need to develop an integration plan, pronto.
"Most dot-corps were established to function as temporary, transitional organisations," Pullman said. "But some companies are now taking a very soloed approach to everything relating to e-business." While keeping the dot-corp operation independent may be the best strategy for the long haul, some companies--especially those under financial pressure--may have to transfer their e-business back into the lines of business.
I-managers who draw up a comprehensive integration plan well in advance of what Pullman sees as an inevitable transition are going to be better positioned to ensure that e-initiatives and their own careers don't get caught up in corporate red tape and inertia.
Payback
Given tighter resources and the pressure to show an ROI, I-managers have to establish priorities and make some hard choices. Noted Pullman: "Right now, a lot of e-commerce executives are scrambling around saying, 'I've got all these e-business initiatives going on right now. Which ones can I cut loose? Which ones make the grade and get top priority, and which ones need more investment?'"
If you focus on the project that will produce a quick, six-month return, you may be looking too much to the short term, and placing expediency ahead of value, Pullman said. "The quick payback is, frankly, not always realistic," he said.
Instead, Pullman recommended zeroing in on the longer-term projects that, in the end, are going to make a real difference. As for the need to show an ROI: "There are ways to structure large, two-year projects in bite-size chunks that have a real return," he pointed out.
Jon Derome, senior analyst at The Yankee Group, also recommended taking a more modest approach as a way of dealing with cost-of-ownership issues. "For example, many B2B projects were originally going to connect to the entire e-marketplace," Derome said. "Now, a lot of these initiatives have been scaled back and are only connecting to a company's existing supply chain partners. People are also building on existing B2B capabilities today, such as EDI [electronic data interchange], rather than scrapping them and starting over from scratch. That's a more pragmatic, realistic approach."
Indeed, for the near term at least, pragmatic and realistic might well serve as the watchwords for I-managers struggling to come to terms with the post-dot-com era.
Back to Table of Contents
