Sept. 11, 2000

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The CIO's E-Biz Tightrope

Your company's enthusiasm for E-business projects could give you a more strategic role in the future

By Dave Bent

he business community's excitement about E-commerce means pressure to implement E-business projects--from selling on the Internet to online travel procurement--is as likely to come from the CEO or VP of marketing as from within the IT organization. I call this the "airline magazine effect."

This presents terrific opportunities for CIOs to become more involved in business strategy and move into even more responsible roles. But, as always, the CIO has the tough job of ensuring the resulting E-business projects are delivered successfully--and that they meet the expectations of customers and of the company.

That puts a burden on the CIO to steer E-business toward projects that make the most sense and offer the greatest payback for the lowest cost. This isn't always easy; when the CEO suggests a new E-commerce system, it's tempting to seize the opportunity and agree immediately, even if it's not the best way to use IT resources.

Here's one way to help your company get the most from E-business. Today, there's a huge range of E-business initiatives open to most companies, such as online auctions, business-to-consumer and business-to-business sales, customer service, and procurement of core business materials and other supplies. When the CEO gets excited about selling online, why not use that enthusiasm to open a discussion about possible E-business projects and their benefits?

I've sometimes used a simple matrix of four squares, of the type popularized by consultants, to categorize these possibilities. One axis represents low to high cost and difficulty of implementation; the other axis, smaller to greater bottom-line benefit. Position the possible projects within the squares of the matrix. This presents the projects in a way that business executives can easily understand--cost and difficulty vs. benefit. This can help to get everyone's buy-in to the applications that make most sense for the company--not just those that are getting the most publicity.

For instance, my previous employer, auto-parts supplier Visteon Corp., buys billions of dollars' worth of materials annually. It became apparent that participating in online auctions for materials procurement--which required virtually no internal IT implementation effort--could be enormously valuable by saving even a small percentage of this expenditure. By contrast, simple-sounding projects such as letting employees buy travel tickets online turned out to require implementation work for the IT organization and learning time for many employees--with a much smaller potential payback.

This type of analysis also explains some of the less-obvious benefits of online sales and service. Well-implemented online customer service can increase profits by outsourcing much of the effort of entering and processing an order to the customer--in such a way that customers prefer it instead of methods, such as call centers. Another benefit of this analysis is that it gives business executives a better understanding of the relevance to E-commerce of your investment in existing business systems and infrastructure.

But it's vital that the front-office online sales system is tightly integrated with back-office enterprise resource planning, to ensure that customers don't face nasty surprises in product availability or delivery. With Internet commerce, there's no face-to-face interaction to build trust between supplier and customer--so if the supplier fails to meet customer expectations once, that customer may be lost forever.

Another benefit of putting the front office online, of course, is that IT executives have more opportunity to become familiar with how the company interacts with its suppliers and customers. This, in turn, puts IT executives in a position to suggest ways to support and improve those interactions. If CIOs make sure that enthusiasm for E-business translates into cost-effective and profitable implementations, they have a better chance than ever to gain more responsibility and respect--and to reach the top rank of their companies.

Dave Bent is CIO and VP of Acterna Corp., a Germantown, Md., communications test equipment, systems, software, and services company. Bent was named InformationWeek's Chief of the Year in 1999, when he headed IT at Visteon, the auto-parts company spun off this year by Ford Motor Co. He is hosting this week's InformationWeek Conference in Tucson, Ariz.

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