InformationWeek

June 21, 1999

Part 1 of a 3-part E-Business discussion
Altered Relationships

continued...page 3 of 3

Walter Curd,
IT director, Fujitsu Microelectrics

Glover Ferguson,
co-director, E-commerce program, Andersen Consulting

Chris Hanan,
VP of business development, E-Steel

Gene Moses, director of technology operations/strategic services, E-Steel

Gary King,
CIO, Barnesandnoble,com

Lisa Richard,
VP of strategic business planning, Toshiba America

Chris Sorensen,
director of business development, Art.com

In business-to-business commerce, price and other commercial terms depend on a multitude of factors. Length of the customer relationship, market strategy, purchasing history, and other determinants drive price and other commercial terms.

We realized that a necessity of achieving widespread adoption was to give our users the ability to reflect their existing business relationships and pricing strategies as part of their E-commerce initiatives. We give sellers on our site the ability to offer differentiated terms to different buyers or buyer categories, thereby allowing them to protect their channel, reflect their strategic market approach, and leverage the power of E-commerce without disruption of their core business.

Change As A Pivotal Issue
Ferguson: There have emerged a number of grand-theme issues with respect to realizing value from E-commerce. Many of these issues pertain to people and the changes they must undertake. Failure to recognize or address these [personalization] issues is an invitation to another round of "technology does not provide appropriate returns on its investment."

For example: Moving from a traditional bank to an online bank might be largely technical. But moving from an online bank to a personal, direct banking experience demands a change of personality or culture: from the queue expediting, "Next, please. Next!" to conversational, "Off to your lake home, eh Mr. Jones?" Viewing conversation as a means of gathering context and context as a means of providing service, "Perhaps you'll need some boating insurance?"

Consider electronic procurement where your sourcing professionals were once valued for the quality and timeliness of their paperwork and are now valued for deal making, deal shaping, and deal enforcement. And employees who buy things must remember and feel comfortable buying within the deal structure enabled by the technology and the transformed sourcing group.

Organizational design, human-capital shaping, human-performance support, and journey management become the make-or-break for many E-commerce value propositions.

Curd: All the consulting companies have a chart that shows alignment or interconnection of people, process, and technology as the key elements of success. Since technology is the easiest part, and since we are technology people, we tend to focus on that when it is clear that all are equally important to success. It's also much easier to blame technology than people or processes when something is not successful.

InformationWeek: If it really is the people, what are some of the particulars you would suggest in creating that "comfort zone" in E-business relationships? What are some ideal concepts of organizational design and human-capital shaping, for example?

Ferguson: Game change is always bad. If you start a game under one set of rules and then change them, you almost always have a problem. Even if the new rules are better than the old. Somehow it just seems unfair.

Example: A new system within a governmental benefits agency will deliver fabulous new value to the citizens. It will allow social workers to focus on their clients instead of their paperwork. But up until now, our workers, who were trained for social work, have learned to assess their value-add in terms of papers processed. Problem: Even though they will finally get to do what they were trained for--and what they wanted to do--they will be very uncomfortable. No magic counseling, patience, and understanding over a big change.

Ensure that you are building complementary, not competitive roles.

Example: E-procurement. Create a staff of sourcing professionals to ensure that purchases are within a deal structure. "So, some headquarters wonk is going to tell us how to configure our server?" If the answer is yes, you have a problem. If the answer is, "No, you configure the server you need. Our expert will get you the best deal possible on that server." You're okay. In one case, you've designed a battlefield; in the other case, you've designed a better arrangement.

Create a cannibal. There are instances where E-commerce needs a different culture than your current organization [provides]. If your people can't stretch far enough to embrace the new culture, you may have to create a fine young cannibal--a spin-off with its own culture.

Example: Traditional bank creates a direct, personal bank. Traditional tellers have a culture that optimizes queues, "Next! Next!" While the new personnel need to be chatty, congenial, and great listeners, [they should be] gathering valuable data about lifestyles, preferences, et al.

A new company can accept apps from existing employees who want to make this substantive change while also interviewing new folks who have a different personality/make-up.

Lessons Learned: All the lessons are clear with hindsight, but it takes specialized skills to anticipate and obviate such problems before they become showstoppers.