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September 27, 1999

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E-Business Moves To Center Stage

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But Hennigan says the company's IT budget of about $80 million, excluding the SAP project, will support only some of the initiatives, so he's forced to prioritize. Supply-chain integration, for example, takes a back seat to increasing revenue by trying to sell more goods over the Web. To do that, Hennigan says, Polaroid will need to focus more IT efforts on improving customer relations. "We realized that 98% of what we do from an IT perspective is either focused in infrastructure or internal efficiencies. Only 2% is focused externally on our customers. That's where I want to devote more resources."

For Maytag, the timing is right to reach to the Web. "We spent the last five years filling gaps, fixing bridges, and catching up," says Wojciechowski. "We feel we're now ready to move out." That means using the Internet to sell directly to consumers.

Although it may seem obvious, it took Maytag a little time to realize how the Web fit in with its channel strategies. The 106-year-old company believes that many consumers will still rely on distributors using burly men to deliver appliances, but the Internet can be used to schedule deliveries and provide service to those customers. Maytag also feels some Web buyers are willing to forego a company delivery and do the pickup work themselves.

Avon Products Inc. doesn't have many burly distributors ringing doorbells, but distribution also is at the core of its major Internet-oriented makeover. As with other companies, the conclusion of Y2K work is freeing up financial and people resources. "We're wrapping up on Y2K," says CIO Sateesh Lele. "That's why we are launching this now. We're looking to replace our entire infrastructure in the next 12 to 18 months."

The $5 billion cosmetics com-pany is selecting new Internet service providers, as well as vendors for hardware, databases, and enterprise application software.

Another factor driving Avon is that it received a wake-up call from an employee survey conducted last year that showed that IT, or rather a lack of IT advancements, was obstructing the company's business strategies.

"Avon's top barrier to growth was identified as IT," says Lele. "Sales reps had poor information, and 50% of orders were inaccurate." The problems were tied to a high turnover rate among the company's worldwide sales force of 2.8 million.

Avon CEO Charles Perrin began working with management consultant McKinsey & Co. late last year to devise a set of growth strategies to expand business in several areas, such as jewelry and fashion, that are predicated on a new IT infrastructure. After Lele joined the 113-year-old company in April, he spent his first three months devising a strategy and the next few selecting vendors such as Dell Computer, IBM, and Oracle to provide the hardware, databases, and middleware, respectively.

The first phase was implemented in August, when several hundred U.S. sales representatives were issued Dell notebook computers and a sales application that lets the sales reps submit and check order status via the Internet.

The current method, which involves handwritten orders and faxing, is very painful, says Lele. "They don't know the order status once they submit it," he says. "We have a high rate of order dissatisfaction." Moving to the Internet is "a major transformation from a customer representative standpoint," he says-one that should make sales reps' work easier and improve staff retainment.

Lele says Avon's efforts are actually a transformation and describes his role as leading the organizational change. "Your first step is to streamline processes and eliminate duplication. No. 2 is to bring in new processes," he says. Though serving as an agent of change may be a new role for a CIO, Lele notes that "CIOs are not just hired for technical skills. They have to be able to reengineer the business and make cultural changes."

Agents Of Change
Maytag's Wojciechowski also views himself as an agent of change as his company accepts the idea that taking advantage of the Internet as a business tool involves much more than slamming in some new hardware and software. "We're going to rethink all of our information systems," he says. "We will become a digital enterprise."

The Internet, while changing business strategies, also has clearly changed a CIO's role within a company, Wojciechowski adds. "I don't spend that much time on technology any more," he says. "Now it's spent on strategy and trying to understand the enterprise strategy. If you were to ask me what my PC standard is, I would scratch my head and say, 'which division?' That's not where I see my added value."

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