InformationWeek
Defining The Business Value Of Technology
September 13, 1999
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Look Outward
The new outward focus carries profound implications for IT. In a recent InformationWeek Research survey of 300 IT executives, the most common "transformational" initiative under way at their companies was interaction with customers. The second most common: The role of IT in the overall business.
At electronics retailer Tandy Corp., senior VP and CIO Evelyn Follit is a member of the senior management committee. She attends its meeting every Monday, then brings resulting action items to her IT staff meeting an hour later. At AutoNation, one of CIO Scott Barrett's direct reports is the VP of Internet marketing. In the past year, PG&E has hired a director of business-process improvement who reports to VP and CIO John Keast. At PHH, IT staff members go on customer sales calls to help make the case for new information services. They do the same at Toshiba America Information Systems Inc., the company's billion-dollar copier, fax, and network printer unit, which now does virtually all of its business to authorized dealers via an extranet called FYI.
Just as important, IT executives say, are internal changes that make such transformations possible. Bank One Inc., the nation's fifth-largest bank-holding company, took a major step this year when it became the largest financial institution to launch an Internet-only bank, called WingspanBank.com. Also, Bank One is moving responsibility for customer-facing applications to its individual lines of business, to be managed by a local chief technology officer reporting to the corporate CIO.
Whether it's decision-making, strategic planning, or systems development, the need for unprecedented speed represents a huge organizational and cultural change in many companies. "Our decision-making process has completely changed," says Keast of PG&E, which is racing to keep up with the transformational effects of energy deregulation as well as E-business. "We used to figure out what was needed to evaluate a new opportunity or initiative and then ask how long it would take to make a decision--say, 12 weeks," he says. "Now we time-box it. The decision has to be made in four weeks, and we'll do as much as we can in that time frame."
Keast's advice for those involved in similar we-need-it-yesterday scenarios: Get used to it. "Everyone has had to do a rapid project every now and then, but this is the standard way it's going to happen from now on," he says. "It's like being in SAP rollout mode all the time."
Illustration by Matsu
To that end, Weirton is encouraging its major food-processing customers to share three years of production data via the Net. Weirton will then analyze that data with its i2 Technologies supply-chain forecasting software for better coordination of production scheduling throughout the value chain.
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Focusing on external value-chain partners is a major aspect of transformation, says Stan Davis, co-author of Blur: The Speed Of Change In The Connected Economy (Addison-Wesley, 1998). "More than any other development, the Internet is dramatically lowering transaction costs and that's radically changing the nature of corporations," says Davis. "Internal sign-offs are being replaced by external relationships, and more of what was done internally is now done externally."
For example, the unit responsible for BankOne.com, the bank's electronic-banking service for its account holders, has been able to make performance and usability enhancements quickly because its IT staffers aren't distracted by other concerns. "The CTO can make snap decisions on resource deployment," says senior VP of IT strategy Gregory Moran.
In its new four-week time frame, the San Francisco utility recently completed a business plan for the potential companywide deployment of Web procurement of nonmanufacturing materials, such as office supplies. The business plan includes the possibility of PG&E using that technology to offer online procurement as a service to its customers, something Merrill Lynch & Co. and Wells Fargo Bank have begun in recent months.
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Photo of Keast by Robert Houser
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