InformationWeek

January 17, 2000

Internet Power Sparks Business
Three top executives discuss how IT redefines their companies' core competencies

Illustration by John Ueland he power of the Internet is forcing companies to redefine exactly what business they're in. Indeed, some companies might characterize their core competency as managing information, with capabilities such as manufacturing auto parts, delivering packages, or producing electricity as mere by-products. Before the holidays, InformationWeek assembled three leading technology executives to discuss the role IT and Internet-enhanced information play in reshaping the future of their businesses in the coming year.

Panel participants included Dave Bent, CIO of Visteon Automotive Systems Inc., the $18 billion auto-parts business unit of Ford Motor Co. and InformationWeek 1999 CIO of the Year; Rob Carter, chief technology officer of package shipper Federal Express Corp.; and John Keast, who last month was named CIO and chief technology officer of Branders.com, a startup that will offer online ordering of company logo-branded items, following a stint as CIO of San Francisco energy company PG&E Corp.

Special-projects editors Eric Chabrow and Paula Klein moderated the discussion. An edited transcript of the discussion follows. An online version of this feature can be found at informationweek.com/769/roundtable.htm.

InformationWeek: What are your companies' core competencies, and what impact does IT play in defining those competencies?

Bent: One of our core business propositions is to be a technology provider of systems from a vehicle perspective, such as a total interior system for a vehicle or an exterior lighting system. We've just reorganized our business, as technology becomes more pervasive in a vehicle. We set up a global technology organization that supports all our product divisions.
Interestingly enough, technology is becoming the product. Previously, we'd have thought of ourselves as a manufacturer. We're very much focused around technology, technology development, and how we bring that to the customer and the consumer. How do we bring things like the Internet into the vehicle? How do we do things like voice-recognition technology?
Technology is becoming the product. We transition from a core competency of manufacturing to that of technology development, selling and bringing technology to the customer.

Carter: Dave's comments are a great segue into the way we view the world as changing. Companies such as Visteon can work much more effectively by having complete information about their parts shipments, whether at a dealership or a customer manufacturing line or whether the inventory is a product at rest or in motion.
A 3-by-5-foot sign that hangs in front of our offices says, "We're an information company that just happens to deliver packages." That we're an information company is a fairly parochial view from the IT standpoint, but it's something that's fairly well-known around the company.
It's not that difficult to run a transportation company; it's difficult to do it with the degree of capability that we bring. All of that capability comes from a high degree of information. Not only does it help your customer, but it helps you.
But the thing that's most important to me is that we don't build our systems to run our company internally; we build our systems with the customer in mind. Whether it's the dealership for Dave or the end customers for John, we have to get rid of the traditional IT mindset that says we build these systems to help us to be more efficient. The new mindset says we build systems that enable our customers to do business with us in a very easy fashion.

Keast: Everything that Dave and Rob have said rings several bells about things that are going on at PG&E. Electricity deregulation is essentially taking the value chain of generation, distribution, and delivery of the electricity commodity into the user's home. It's splitting that value chain into separate chunks. It's caused PG&E to realize how important the integration of the different pieces of the value chain are with the currency of that integration coming from information.
In the old days, you'd turn on the generator, which used to pump out kilowatt hours. They would go into the wires and get delivered to everybody's homes. Now, PG&E has a trading organization in the middle of this that can make a decision in a split second that it's more cost-effective for a power plant to shut down and to sell the oil on the open market that it would have used to convert to electricity. Traders now make decisions around the price fluctuations in energy commodities that cause the operational side of the business to make dramatic changes. The only way to effect this and maintain profitability and shareholder value is to have very integrated, very information-intensive systems, which initially have been inwardly focused on how to make this value chain work together.
PG&E is beginning to realize that the same information we use internally is also very important to a certain set of our customers. Maybe it's an Intel that's running a big chip-fabrication plant and wants information from the meters at five-second intervals so they can look at exactly what consumption they've got. PG&E has placed a lot of emphasis on the use of information to reconnect these different parts of the value chain in a competitive electricity market.
We're beginning to realize--maybe a little slowly--just how valuable this information is to our customers. That's going to cause us to go through a new wave of thinking through our systems strategy to do what Rob was saying--which is to make them much more focused toward the customer and less focused internally.

InformationWeek: Does that mean that you will be selling the information, and making that a new business or part of your existing business?

Keast: In conjunction with the delivery of electricity and gas, PG&E has a set of information products that it delivers through the Web to a customer's Web browser, and it charges for that information. We're getting to the point at which there's much more value--and therefore price potential--in the information if it's assembled correctly and delivered appropriately than there probably is in the energy commodity itself. The challenge for PG&E is whether to sell those information products separately from the energy commodity or offer them as part of a bundle.

InformationWeek: Do the other two of you have anything like that going on?

Dave Bent Bent: It's definitely an aside to the core business. But if you look at the automotive industry, the Internet is having a big effect in terms of setting up exchange portals, where many suppliers can get information about commodities and post requests for proposals, requests for quotations, and have people from around the globe respond. I see ourselves and some of the others selling information-exchange capabilities, providing a forum for the supply chain to pick up everything from a request for proposals to sharing the customers' demand and providing a billing schedule in a more real-time way than was ever possible. People are clearly willing to pay to get access to that kind of information.
Information becomes a differentiator. As we move from mass customization to mass personalization, we can be very responsive from a consumer perspective by effectively leveraging the Internet's capability of sharing supply chain information to get closer to a build-to-order operation.

continued...page 2, 3

Illustration by John Ueland
Photo of Bent by Jack Kenner

Back to This Week's Issue
Send Us Your Feedback
Top of the Page

Get InformationWeek Daily

Don't miss each day's hottest technology news, sent directly to your inbox, including occasional breaking news alerts.

Subscribe Now

More Live Events>>

This Week's Issue

Back Issues

Must Reads &
IT Trends

Free Print Subscription

Special Issue

Back Issues

Must Reads &
IT Trends

Current Government Issue

Back Issues

Must Reads &
IT Trends

In this issue:

The Government CIO 25: These influential and accomplished government IT leaders are finding ways to be cost efficient and still innovate.
Rethink Video Surveillance: It's not just about networked cameras anymore. New technology provides analytics, automation, facial recognition, real-time alerts and situational-awareness capabilities.
Read the Current Issue