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The Internet Remakes IS

The irresistible force of the Internet is changing the way IS does its job
By Emily Kay
Issue date: Jan. 27, 1997

Two years ago, senior officials at Lombard Institutional Brokerage Inc. had a flash of insight that proved prescient. Executives of the San Francisco discount securities broker realized the World Wide Web was not just a new channel for selling their trading services, but also a huge new business opportunity. To realize that opportunity, Lombard's IS department became the focal point of the company's business strategy. Not only did IS bu ild a Web site, but it also built a new business.

"From the beginning, we were going to build a product, not just a solution customized for Lombard," says John MacIlwaine, president of the spin-off, Bay One Technologies Group Inc. The 15-employee company was launched last June as an Internet technology developer.

Lombard's success as the leading Web-based securities broker, and the instrumental role of Bay One, were the key reasons that Dean Witter Discover Corp. of New York acquired the privately held companies a few weeks ago for an undisclosed sum. Lombard president David Espenschied says Bay One is an important part of the acquisition that will complement Dean Witter's electronic-commerce initiative.

Many organizations jumping on the Web call in the IS department only after a series of outages, hacker invasions, or other disasters hurt their sites. But Lombard personifies a different approach. The securities firm entered the world of electronic commerce over the Internet with a plan that featu red a starring role for its IS department.

Most other companies, though, are just beginning to feel the effect the Web has on IS managers. The surge of interest in the Internet and its technologies throughout corporate America is remaking the roles and responsibilities of IS departments, managers, and staff--changes we examine in this Special Report. New job titles, such as Webmaster, are surfacing on the organizational chart. Programmer job descriptions are almost as likely to contain the word "Java" as the word "Cobol." Network engineers who don't know TCP/IP are scrambling to upgrade their skills, lest they face extinction.

More Work For IS
The vast array of changes to IS departments are added atop existing responsibilities. Technology units generally retain their traditional duties of managing the data-processing infrastructure while coping with a new host of Web-related tasks and the enormous challenges that accompany them.

Different companies delineate Internet responsibilities d ifferently. Larry Quinlan, director of practitioner support services at Deloitte & Touche Consulting Group in Atlanta, splits Internet development tasks between two groups. The IS department manages hardware, operating systems, security, and physical Internet connections, while the electronic-commerce business unit designs Web page layouts, organizes content, handles testing, and acts as a liaison with other business segments. "We've separated the two components," says Quinlan. "We think the skills are very different."

The impact of the Internet on Quinlan's budget is typical of its impact on IS. Internet projects consume some 15% of Quinlan's development resources. He expects such projects to more than double in 1997 and account for 35% of development resources. Almost all of the company's 10,000 users have Internet access.

Quinlan's department may be a bit more aggressive in its Web spending than many other companies, but the doubling of spending is typical. The median increase in Web spending t his year at 100 sites polled by InformationWeek in December will be double the 1996 pace, from 5% to 10%. Note that the average Web budget reported in the survey will be 17% of overall IS spending, up from 12% in 1996. The disparity between the median and the average is explained by the few shops, like Deloitte & Touche, with relatively large allocations of personnel. Another example: One company in the survey said it had filled more than 75 Web-related jobs last year, and plans to hire another 125 in 1997.

Increased staffing for developing home pages and transaction services isn't the biggest impact, though. The seemingly ho-hum nuts and bolts of building an infrastructure to support a company is the show stopper. Without a robust network architecture, there is no intranet.

"The No. 1 issue is, do people really have the corporate infrastructure to handle this?" says Rick Villars, network software director with International Data Corp., a market-research firm in Framingham, Mass. "IS people have t o answer this because they have to deliver it, but it's unfortunately the question that gets answered last."

Technology chiefs must also worry: "If we build it, will they come?" says Matthew Cutler, president of Webmasters' Guild Inc., a 1,500-member organization in Cambridge, Mass., that promotes Internet technology. Cutler answers his own question by saying: "Definitely not."

While the role of Internet evangelist is unfamiliar to many IT managers, Cutler promotes the importance of internally advertising Web projects. Advocacy is increasingly critical to the success of Web projects. "These systems really require substantial resources, devotion, and mindshare, particularly among upper-level executives, in that these systems affect all aspects of a company," Cutler says.

Yet IT managers must not over-sell what the Web can deliver. "They want to be careful to set appropriate expectations," says Cutler. "You don't want to underpromise because people won't be excited. But don't overpromise and have ex pectations out of line with what the budget can deliver."

Fine Line
Wayne Lemmerhirt walks that fine line. Technology services manager with electric utility Boston Edison Co., Lemmerhirt and his staff have had to add Internet evangelism to their traditional IT repertoires. "We have people who maintain the infrastructure, making sure Web servers are up and software is running," says Lemmerhirt. "But we're also trying to promote it."

It may sound trite, but many technology chiefs say their most formidable tasks are coping with the rapid rate of technological change. "The biggest challenge is to prevent oneself from implementing technology that won't be around in five or six months, to keep up with the rate of change and support existing systems," says Bay One president MacIlwaine. "That's always the case with technology, but it's even more so with the Internet."

Even seemingly minor technological changes can have widespread ramifications. For instance, a small upgrade changed the color o f brokers' screens at Lombard. This minor change was incompatible with one of the company's supported Web browsers. "This specific browser had trouble seeing a button because the color map within its system masked the text on the image," says MacIlwaine.

As companies hasten to deploy their own successful projects, the demands to do it now and do it right can overwhelm even the most well-prepared IS departments. To be sure, Web sites, intranets, and electronic-commerce projects are making new and uncharted demands on IT managers, staff, and structure. "This is a whole new world," Cutler says. "It's a very exciting but tumultuous time to be an IS professional. If you have the right skills, it's the time to be in this area. At the same time, traditional, old-school methods are increasingly thrown out the window."

Are you ready?

See related story: " A High-Level Approach Succeeds...While A Low-Level Approach Struggles "

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