The study interviewed executives at 48 companies--most of which had more than $1 billion in revenue--and found that only 26% had one person charged with leading E-business efforts companywide. Less than half of the companies surveyed had an executive with an E-business or E-commerce title, and only 40% of those executives managed a budget for E-business. Typically, the initiative and budget is coming from a group--such as marketing or supply management--that sees an opportunity and starts implementing an Internet strategy.

Decentralized IT initiatives let business-unit managers push projects far into development before they face scrutiny from outside their departments. In a study looking at the role of centralized IT leadership, the Working Council for Chief Information Officers, an arm of the Corporate Executive Board, a Washington think tank, says some companies reported that in-depth audits found more than $100 million in unbudgeted IT spending.

Benchmarking Partners managing director Debra Hofman calls it a "let-the-flowers-bloom" approach. "There's a lot of activity and discrete investments, but there's not a lot of cohesive vision for the activity," she says. "There needs to be some sort of framework and vision for what a company wants and how E-business applies to them."

E-business further complicates the delicate task a CIO has of balancing centralized IT projects and responsibilities to business units. It has become common for some IT personnel to report to both an IT department and a business-unit manager. But the emergence of E-commerce officers and specialized E-business units could result in the future CIO sharing turf--or fighting for it--more often. That means CIOs and the next generation of IT leaders should be boning up on their marketing skills today, executives and analysts say. "Many CIOs are being left out of E-commerce initiatives," says Bud Mathaisel, CIO of electronics manufacturing services company Solectron Corp. in Milpitas, Calif., and former CIO at Ford Motor Co. "That's because many of those projects are being led by marketing. This may be a major phenomenon--the IT people within marketing groups moving onto the fast track to CIO."

Berge Ayvazian, president of consulting firm the Yankee Group, predicts that in some cases there will be a power struggle between the CIO and the person in charge of a company's Internet initiatives, since the most successful E-business leader will become a company star. "What will happen to the CIO and IT as this shift happens? Who will be the gatekeeper of IT?" Ayvazian asks.

But to some, this presumption of a growing rivalry between CIOs and E-business managers doesn't ring true. At Charles Schwab & Co., where a heavy trading day brings 10 million or more transactions by phone, broker, and the Web, so much of the company's business is tied to E-commerce that CIO Dawn Lepore doesn't worry about being considered anything but one of the core business managers. "I don't look at myself as a technologist, and neither does my boss or my peers," says Lepore, who reports directly to co-CEO David Pottruck along with four other top executives. "They look at me as the person who runs the factory that fuels our business."

Schwab also illustrates the new opportunities for IT leaders. Lepore hired the person who's now enterprise president for the electronic brokerage, Gideon Sasson, luring him from his role as VP of information services technology at IBM to run the technical development team of the initial eSchwab online-trading unit. In 1997, when Sasson jumped to head the electronic brokerage unit, it was the first time a non-CIO had stepped from a technical to a general management job at Schwab.

These opportunities spring from the fact that the new leadership environment at many companies is letting CIOs measure success not in traditional terms--finishing projects on time and under budget--but by the numbers that top business managers strive to influence: revenue and profit.

At Visteon Corp., the $18 billion parts subsidiary of Ford, IT staffers are working closely with the marketing department to create an online business for replacement parts. The company does about $700 million in aftermarket parts sales today, with very little sold directly to consumers. By reaching users and new distributors online, its goal for that business is $2.5 billion in 2002. "Can we, through technology, go out there and create an Internet business and put a revenue target on it?" asks Visteon CIO Dave Bent.

Bent says this gives IT the chance to lead the company into a new line of business. Already, marketing and IT people together have created an online catalog for audio equipment and back-seat video game systems that consumers would buy and have installed after they purchase their vehicles.

With the growth of E-business, the career path for the techno-savvy manager is becoming broader, yet more complex. At the top, E-commerce is tying IT more directly to the bottom line and expanding technology's role in every corner of the business. This makes it more likely that successful CIOs--E-leaders--will be seen as having the breadth of experience needed for higher executive jobs.

"The person who will take over my job will have a technology background," says Steve McDermott, CEO of Garban-Intercapital's operation in the Americas, a 950-person institutional money and securities brokerage with more than $250 million in annual revenue. "During the '80s and into the '90s, it was the finance and MBA types. In the future, it will be the E-commerce and technology types."

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Illustration by David Guidera
Photo of Lepore by Linda Sue Scott