InformationWeek
Defining The Business Value Of Technology
June 7, 1999
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IT and business executives generally have the same opinions about the business goals driving their company's E-business applications. But the survey results suggest that there are business advantages that appeal to a higher percentage of IT executives than to business executives. The E-business goals of "improving relationships with partners" and "improving time to market" show the widest gap in perceptions between business and IT. Other areas where considerably more IT execs see E-business potential: reducing operational costs and increasing employee communications and satisfaction.
That last one is important because those most likely to access a company's E-business applications are its own employees, according to the survey. Internal communication is often one of the first applications a company sets up on its IP network, in the form of an intranet. Also, many companies are increasing their use of the Web as a training and support tool.
"Every employee has access to the Web," says IBM's Ward. "We're at the point where 15% of all our education at IBM is over the Web. This year, it will increase to 30%."
Still, respondents on both sides agree that companies are using E-business internally with success. When asked in the survey which goals for E-business had been met, nearly three-quarters of IT and business executives cited employee communications and satisfaction.
When asked which business goals were highly significant in their organization's decision to deploy E-business applications, the vast majority of IT executives (92%) and business executives (90%) cited creating or maintaining a competitive edge."We compare ourselves against everybody," says Terry Jones, CIO of Sabre Group Inc., the travel-reservation system majority-owned by American Airlines. Jones is also president of Travelocity, Sabre's online travel-planning subsidiary. Travelocity, for example, reviewed competing general-purpose travel sites and found that its information regarding various hotels lagged behind the sites operated by hotel chains themselves.
"It didn't match up to the hotel sites," says Jones. As a result, Travelocity revised its site in April to include more photographs of hotels where customers could make bookings as well as maps and reviews of local restaurants.
But not all IT managers think competition is the key. "We believe that you have to be an early adopter to establish a sustainable presence on the Web," GM's Noble says. "But I'm not sure it's that much of a sustainable competitive advantage." Just being on the Web doesn't bring much of an advantage these days over rivals, says Noble, because E-business initiatives are moving from a competitive advantage to a competitive necessity. But if a company's Web operations are able to add value and deepen relationships with customers, it's a different story. "If you can be very customer-focused, then that is a sustainable competitive advantage. We believe that passionately."
He's not alone in that thought. Improving customer satisfaction ranked second to creating a competitive edge as the best reason for an E-business initiative, cited by 88% of IT executives responding to the InformationWeek and Business Week survey. Also, three out of four respondents say that as a result of their company's E-business deployments, they're listening more closely to their customers.
Web sites not only increase the ability of customers to communicate with companies, they free up customer-oriented personnel for more intensive responsibilities. As companies interact with their clients through electronic means, salespeople have increased face time and improved relationships with customers because many administrative tasks, such as checking the status of orders, are done on the Internet, says Pete Solvik, CIO of Cisco Systems. More than 80% of product support at Cisco is conducted via the Web, while the rest is handled by 700 engineers who grapple with the toughest problems.
However, as companies move many of their operations to the Web, customers have easier access and insight into their inner workings. That means it's incumbent on businesses to know what they're doing. If fulfillment systems and procedures, for example, aren't integrated with online storefronts, customers will be able to see that from the Web. "If you don't understand your business processes, your customers will see the complexities in the back part of the company," says IBM's Ward.
Connecting the Web front end to systems in the back office is a chore for any company engaging in E-commerce. It requires that CIOs and their lieutenants achieve a balance between various types of IT professionals and expertise. Sabre's Jones says a balanced IT department includes a mix of people-- some who have traditional IT skills and younger staff who are adept with Web technologies. Many of those younger people are great with Java and other Web technologies but they lack some fundamental computer science skills. "A lot of these employees need basic training in code quality," says Jones. "They're PC jocks and they're good, but they have no structure. They don't understand high-quality code."
Boeing Co. is moving from presenting information on the Web to conducting transactions and processing data. Because of that, the company is changing the skill requirements in some parts of the IT department. Previously, Boeing hired people to publish content in HTML on its company intranet. That content mainly involved forms for functions ranging from requisition of supplies to health insurance. Those forms are now printed out and mailed back to the various departments.
But Boeing is beginning to complete the loop electronically and process the forms online. That requires people with knowledge of databases and programming languages, because it involves processes such as authentication and routing, says David Weitz, manager of the IT team that handles the company's public Web site and internal portal. Most of the 14 writers, graphic artists, and programmers on his team don't have those skills, so he's sending many of them to Boeing's in-house training program to learn about databases and other back-end technologies."I look at it as coming full circle," says Weitz. Boeing started by hiring people who were good communicators and taught them about HTML coding, he says. Now he's taking those people who have a good knowledge of the Web site and teaching them about programming and databases. "You just can't be a static HTML coder. As you move forward, you're going to have some knowledge of databases." That's because Web pages are increasingly being tied into back-end systems for processing data collected via the sites.
Indeed, business and IT executives agree that E-business increases the need for technology skills, employee training, and the need to work cross-functionally (see chart, above). That's why CIOs find themselves looking for a mix of backgrounds and skills in the people they hire. "The world is becoming a place where people need to have some capability to reinvent themselves on a regular basis," says NASD's Bailar. That requires people with broad backgrounds who can be useful grappling with a range of technical challenges. Bailar, for example, took some experts in transactions on Tandem computers and asked them to look into Web and Windows NT architectures. "You get a very rich perspective when you do that," he says.
Regardless of their industry, CIOs agree that achieving the right balance of skills in their departments is one of their toughest challenges. That's complicated by the fact that E-business increases the need for staff training, according to almost three-quarters of the respondents to the survey. The time and opportunity for training is a luxury for most staff members. Sabre's Jones says a lot of training is done at conferences, because it's a good way to stay current with rapidly changing Internet issues and technology.
While offering many advantages, E-business is creating a lot of problems for IT managers, related mainly to internal change and increased workload. It's also requiring IT managers to communicate more effectively with staff and with the business side. Despite the pressure, though, many executives revel in their newfound roles. "Traditionally, the IT function is a translator--IT listens to the business and translates that into information systems," says GM's Noble. "In this new era, the IT function is there to whisper in the ears of business executives, `Did you hear what Ford was doing last week? Did you see what Proctor & Gamble is doing?'"
Call it wish fulfillment.
--with Bob Violino and Jennifer Mateyaschuk
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