InformationWeek

Freed from the corporate bureaucracy, the thinking went, such groups could run as fast as the pure-play startups and offer the juicy stock options to attract top IT talent.

Times have changed. InformationWeek Research's just-released E-Business Agenda survey of 375 business and IT managers finds that such approaches are rapidly falling out of favor. Certainly the recent, mostly downward gyrations of newly minted Nasdaq initial public stock offerings have something to do with it. Those dot-com stock options lack the luster that they had at the beginning of the year.

But a more fundamental change is taking place--the sense that E-business needs to be an integral part of the way a company does business. The most prominent E-business pioneer to see this early on was Charles Schwab & Co., when it folded its E-Schwab subsidiary back into its core business. More companies are seeing a similar light.

"Our ultimate vision is to have every employee in the company be an E-business employee," says Fred Buehler, director of E-business at Eastman Chemical Corp. in Kingsport, Tenn. "We're focusing more and more internal resources on E-business," adds Regg Bonnevie, director of global programs for E-business at Eastman Chemical. "Every day, we're building more E-business mindshare and talent within the company."

In the survey, the number of companies deploying E-business in a majority of their business units shot up 15 points, to 61% from 46% in December. At the same time, companies partnering with Web-only startups plunged to 22% from 34%; companies investing in or merging with such startups dropped to 13% from 20%; those creating a new Web-only business division fell to 11% from 21%; and those spinning off a Web-only business unit fell to a barely discernable 3% from 10%.

An increasing number of companies have established E-business divisions--reporting to very high-level executives--that work with business units to deploy E-business initiatives in those units. Case in point: Mark Hogan, the head of General Motors Corp.'s highly touted eGM unit, reports to Ron Zarella, president of GM North America. The eGM unit has grown to 150 people in less than a year. Its ranks include IT staff, technology developers, and sales and marketing professionals.