Sept. 11, 2000

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The Business Of E-Biz

Top companies take many paths to the same goal

By Eric Chabrow

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rowded into a meeting room at a downtown Pittsburgh convention center in May, 140 IT managers listened as their CEO congratulated them on their business acumen. "When I meet with my peers, most of them talk about how hard it is to work with their IT organizations, to get IT personnel integrated into the business and thinking like businesspeople," Jim Rohr, CEO of PNC Financial Services Group Inc., told the group assembled for a semiannual IT management conclave. "That's a problem I don't have."

Rohr isn't alone. Though some companies still preserve a church-state separation between IT and line-of-business units, that's not the case among the companies represented by the InformationWeek 500, our annual ranking of the leading implementors of information technology in the business world. PNC Financial is one of them.

A recurring theme voiced by scores of top IT managers and business executives interviewed for this report is the overwhelming union--an interdependency, you might say--among IT, corporate management, and business units. The year 2000 may be best remembered for a millennium bug that didn't have

much of a bite, but for many companies, it was the dawning of what promises to be an unprecedented era of cooperation between IT and business. In its 12th year, the InformationWeek 500 list was determined by a far-ranging survey of IT usage, business processes, and E-business practices--with a special emphasis on innovation--fielded this spring by InformationWeek Research.

Spurring companies to transform their core business models into ones highly dependent on IT, not surprisingly, is the Internet. In an age where every other business term begins with the letter E, IT serves as the catalyst propelling those corporate initiatives. "Technology drives value--for our shareholders, our customers, and our employees," says Carolyn Osborne, senior VP of IT at Carolina Power & Light Co., a $3.36 billion utility in Raleigh, N.C. "Everything we do in IT is focused on increasing the value of our company."

E-business, the corporate offspring of the Internet, continues to captivate the attention of business leaders. Fully 97% of 250 IT executives at InformationWeek 500 companies surveyed in a follow-up study this summer say E-business is the No. 1 business priority their IT departments will implement in the next year. E-commerce applications, intranet and enterprise portals, and business-to-business electronic networks top the list of key strategic technology priorities. InformationWeek 500 companies, on average, derive 22% of their revenue from E-business transactions, and 45% of those companies report profitable E-business operations.

Up-and-coming "bricks-and-clicks" companies continue to invest heavily in business-to-business operations. Take, for instance, truck carrier Schneider National Inc., which expects to gross $9 million in revenue this year from its Web initiatives. Overall sales at the Green Bay, Wis., company last year topped $2.7 billion. Yet, Mark Mullins, VP of program management, predicts business-to-business online revenue will "quadruple in each subsequent year while generating superior returns."

Such expectations are changing the way companies do business. Over the years, 80% of Burlington Northern Santa Fe Corp.'s revenue has come from 20% of its largest railroad customers, hauling cars for General Motors, appliances for General Electric, and beer for Adolph Coors. The $9.1 billion Fort Worth, Texas, company exchanges bills of lading, invoices, schedules, and other documents with its biggest customers through electronic data interchange. But EDI is complex and requires financial and IT resources to implement. Internet technologies such as the Extensible Markup Language let Burlington Northern offer EDI-like features over the Web, giving smaller companies benefits once available only to big corporations.

Also, Burlington Northern co-founded a Web business, Freightwise, that brokers freight services across transportation modes. "We haven't come up yet with a new way of doing our core business as a result of the Web," CIO Bruce Freeman says. "What we have seen is a tremendous increase and opportunity to simplify our business through the use of technology because of a standard platform, the Web, which is a more-efficient means of providing services that support our business."

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Illustration by Brian Cronin

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