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March 1, 2000 *3,400 subscribers* Volume 2, Issue 3
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Question of the Month
The topic for March focuses on Executive Ability to Morph
Selected Answers of the Month
These opinions relate to the disk drive industry:
The majority of executives will have a difficult time morphing. There is an attitude of hiring a consultant and adding an e-commerce group to the business structure rather than immersing the company in the changes needed. Keep the silos. One company is experimenting with e-commerce on new businesses and not changing the parent organizations. To make more widespread e-commerce changes these disk drive industry executives and their staff will require much more education. They recognize that changes will come but are afraid of the unknown.
If e-commerce changes are to be successful, they must move from the traditional IT or marketing location to the CEO and Board of Directors level. The Y2K exercise shows what can happen if something critical to the business entity is embraced by the BOD and the President/CEO is held responsible.
(F.L., Silicon Valley, California, USA)
I do not believe that, apart from a third of Global 2000 companies, executive management will successfully lead their companies to be holistic Internet-enabled entities. There is a combination of problems. The majority of companies are focused on short-term goals, because bonuses paid to executives are very much dependent on how they are measured on these short term goals, which are often related to how well they manage short term divisional budgets. Hence, there is a lack of cross-divisional cooperation. This situation exists because many investors want immediate results. This culture needs to change from short-term to longer-term, in order to foster decisions that are in the best long-term interest of corporations. Internet enabling is one of them, requiring cross-functional cooperation for success.
For the third of companies whose executives will be successfully leading, the ownership will be at the CEO / President level. Any level lower than that will not see the same success rate.
The four companies I have worked with are in the telecommunications industry. Their approach so far is departmental. Most have only established a Web presence with a couple having half-cooked B2C front-ends. No integrated back-end, B2B or supply chain, ERP integration, etc. There is no Internet related vision (at least in public domain). Sad, as these companies could be some of the losers of tomorrow.
(K.P., Silicon Valley, California, USA)
Most companies will become e-commerce enabled, however I do not believe that the majority will take a holistic approach. Everyone wants to jump on the e-commerce bandwagon, which (the majority believe) is to going toward greater wealth and prosperity. However, how they get there isa detail that remains shrouded in cyber mystery.
The big clients that I see at work (as an international tax attorney) seem to be departmentalizing e-commerce operations. They are businesses that must start an e-commerce branch or operations. Only a few, usually dot.com companies to begin with, are treating e-commerce holistically.
Silicon Valley, California, USA)
Most companies are saying that they are taking a corporate-wide approach while in reality they are developing a departmental approach. The departmental approach may not be all bad if they work quickly and let others observe the initial successes, thereby creating an atmosphere of wanting to participate. This can work if they start with a couple of simple initiatives such as HR and Marketing before taking on the more complex ones such as Purchasing and Sales.
In most cases, the IT department is charged with developing the Internet initiative. In my opinion, this may work, but I believe that it takes someone with broader skills that just IT to drive this process. A broader business knowledge and a more highly developed personal interaction skill level is necessary along with some Internet capabilities.
(M.M., San Francisco, California, USA)
Executives need to see Internet-based communication as more than a subset of marketing and/or information services, which are the departments to which it's typically relegated at present. The impetus, in my experience, can start from any senior manager or trusted consultant who has come to understand the inevitability of involvement in e-commerce for all Global 2000 companies.
The industry segments with which I'm most familiar have been relatively quick to adapt to related technologies (email, intranets, Web pages) but much slower in morphing their entire business to the realities created, and yet to be created, by the potential of the Internet.
Bernstein, Publisher, "Crisis Manager", http://www.bernsteincom.com,
Monrovia, California, USA)
some companies are more aggressive than others in recognizing how their business
is evolving. The executive who does not recognize that the Internet will
change the way business is done, particularly at this stage in the game, risks
falling woefully behind in the learning curve that is currently being administered.
Online companies are providing a full range of services from recruiting to marketing
to cost reduction to materials procurement etc. Look at leaders such as
Ford who have made a commitment to provide PCs to every employee who wants one.
They recognize that if employees are not familiar with technology, it will hamper
Ford's ability to compete in the 21st century. Additionally, they have recently
penned an agreement with Oracle to establish B2B marketplaces for everything from
supplies to materials procurement. Mgt needs to constantly be on the lookout
for technologies that will reduce costs or expand distribution channels.
e-commerce to happen within companies, the CEO must take ownership. In order
for Global 2000 companies to take full advantage of emerging technologies and
ways of doing business, there must be buy in from the top. The CEO
sets the future vision of the company and must be open to significant changes
in the way business is currently conducted. The implementation of that vision
can occur deeper within the organization. There should not be a Board in
existence who is not questioning the CEO as to their e-commerce strategy.
(S.S., Cupertino, California, USA)
I believe that a majority of the Global 2000 companies have not morphed. There is a fear of the unknown and change. They are afraid of failure, and not realizing that the failing lessons are valuable "what works and what does not" for them and their customers. Companies know they have to "morph", they just don't know how. They state that there are not enough qualified staff to assist them within their markets. Paranoid, a little, traditional sales channels are afraid. How will a company sell their product and not cut off their own supply of income?
(L.M., Silicon Valley, California, USA)
I believe that there has already been a scramble for the Global 2000 to move to the Internet. The challenge is to what extent - and more importantly for what business purpose - do they make the move. So I don't think the question is if they can move there in 2000, the question is how effective will they be. That is the heart of the issue surrounding your question regarding what they need to do in order to accomplish the task. It really is a very basic business question. What is my business model? How can this tool called the Internet help support my current model and what new types of models can I deploy? At the very least what efficiencies does it allow me to implement? Where can it support my business the best? Once you can answer these questions you can begin to prioritize what processes you want to move to the Internet. Realistically, budgets and manpower will preclude companies from making the move all at once, so the challenge becomes to identify the business needs and the role the Internet will play and then to prioritize the projects. The error that most companies make is that they fail to take sufficient time for concrete analysis. They rush to judgment in order to quickly establish a web presence without thinking through the tools potential and implications of their decisions.
Regarding who should be setting up e-commerce, it varies. In some instances the Business side of the house is setting up e-transformation, e-executive type of organizations that will work to drive change in the corporation. In other case you will see the IT organization take responsibility. I believe the vendors, more than anyone else at this time, are driving the transformation to e-business. Most companies are reacting and not being proactive in their outlook.
Companies are currently implementing a combination of departmental and corporate-wide approaches. In large companies this can lead to confusion between departments and divisions. I think most of the Global 2000 already have content up and running on the web. The real drive now is to transaction-enable web sites. So the big push is around transactions and using the web to streamline the supply chain.
Lombard, Illoinois, USA)
The executive management of the Global 2K companies that lead their companies have done the research on successful campaigns. Once they have models of what works, they will look to see how it can be applied to their business model. To be successful, they will need to identify who their best customers are, what these customers need, and how the company can use Internet-based solutions to improve these relationships.
(N.D., Campbell, California, USA)
One of the issues I have to mention is the cross-utilization of terms when people discuss electronic communication of financial and business related transaction data. In my vernacular, e-commerce deals with the 'retail' or 'click and order' business we see evolving on the Internet; the Ebays and Barnes & Noble folks who sell directly to the consumer. The e-Business format deals with the backbone of business enterprise, both on the Internet and other communication infrastructures (Value Added Network Carriers, T1's and WANs, etc.). e-Business is processing Purchase Orders, Invoices, Shipping Notices, etc., electronically utilizing EDI and other forms of electronic business communications. With this in mind, and since my expertise lies in the e-Business world, I can address your issues from that perspective <smile>.
On the whole, I don't think that executive management of Global 2000 companies lead their companies to be holistic Internet-enabled entities in the year 2000. I believe there will be a significant falling out of companies as the Internet and what it represents- Global Communication on demand - take hold. I do not think the impact will be dramatic, but gradual.
Many of the companies that I see today are still struggling with the new ERP systems they have just implemented. They are having difficulty figuring out how to conduct ongoing business operations; not how to lead in an Internet-enabled enterprise. I do not really believe that most Executive Managers in many of these companies really understand what they truly are facing! GLOBAL COMPETITION ON DEMAND! The Internet has enabled anyone and everyone to compete on a product value and price basis. Real-time quotes meeting real-time production and delivery schedules. If you know anything of the 'spot oil' market that soared during the 'Oil Crisis' of the late 70' and early 1980's you see what 'demand sales' of product in a 'price on demand' climate can do to a market commodity!
Many of today's executives do not understand just how fast and furious the marketplace will/is/has become.
I think that many of Global 2000 companies will be brought 'kicking and screaming' to the Global Internet world! Those that do survive will do so by enabling the dynamic components of their companies; yes even in MIS (Management Information Systems). Those companies who have CIO's and Senior Business Analysts who understand both the technology AND the ability to make a PROFIT in a business enterprise will succeed. Those individuals who 'partner' with the makers of product and the distribution arm of their companies to join together to form a truly dynamic Global Business Enterprise. One that is responsive to both demand, supply and of utmost importance: CUSTOMER SATISFACTION. This will make a difference which widget gets purchased when competition drives prices to within a drachma difference. Others will just dry up and fade away (pity the shareholders!).
Partnerships, both within and outside the organization will make the difference. No longer can companies just hang a product out there for someone to walk by and purchase. Customer retention and service will make the difference.
Naturally, my clients will be at the cutting edge of PROFITABLE e-Business ventures <smile>, but many companies are still trying to figure this one out! Many have departmental task forces or project teams developing and deploying prototype systems. Some are taking a divisional spearhead approach. Some are just sitting around thinking about it <frown>! The ones who are going to really succeed will take an old fashioned approach. "How can we make an honest profit in a Global Economy and what resources will be required to succeed?". This is not brain surgery or rocket science; just a new business model evolving on the foundation of technology and communication infrastructure advances. We saw it with the light bulb, commercial air travel, and computers, now the Internet. The Internet is only providing the backbone infrastructure to support true Global Business. Now we do business 24/7. No down time allowed or the 'deal' will be missed/lost. Companies have to think GLOBAL and 24/7. National boundaries to business are falling all over the place and will continue to do so at an accelerated pace.
As far as 'activities'? Many are still trying to figure out how to process a purchase order electronically via Electronic Data Interchange (EDI). Others, who have mastered this approach, PROFITABLY, are proceeding ahead with the next logical step offered by technology: XML/EDI and web based communication structures. The losers are still tying to determine what EDI means! <grin>
(Skip Stein, Management Systems Consulting, Inc., http://www.msc-inc.net, Orlando, Florida, USA)
To be successful, executives have to encourage all Marketing/Sales personnel to change their way of thinking in doing business. I think most of the Executives understand that e-commerce is the way to do business for the next 10 years, it is just a matter of time. I worked as a Software developer for a variety of industries, such as car dealerships, wholesale distributors, and retail distributors, who I think more than anybody else need to use e-commerce concepts in conducting business. Owners of these companies must start a.s.a.p.
I believe that executives who are positioned to lead their companies toward holistic Internet-enabled entities in the year 2000 would have defined their vision and strategy 3-5 years ago. Organizational restructuring, paradigm changes, and planning should have already happened and year 2000 should just be execute, execute, execute. For companies that can't do it themselves, they should explore application service providers and/or acquire or partner with best-of-breed application/e-technology providers.
To make e-commerce happen, everyone in the organization from the top down should embrace it. Our clients are taking departmental (i.e., Accounting, Management Reporting, Procurement, Revenue) approaches. Our partners are taking the corporate-wide approaches. Both our clients and partners are engaging in upgrading their hardware/software at the same time doing business process re-engineering, in order to optimize benefits from embracing the e-commerce/e-technology. Additionally, our partners are developing new business models.
(I.R., Fremont, California, USA)
Companies need to implement 100% Web-architected solutions that are built from the ground up for the Internet economy. For the last decade, the preferred way of building applications has been client server technologies. What client server technologies require is a heavy business logic implementation on the desktop computer. This makes it extremely difficult to deploy, manage and upgrade enterprise implementations of software because each desktophas to be managed individually, and if you have 1,000s of such desktops... Moreover, client server technologies work very well in the local area network (LAN) environment. Contrast this with the Web-native architecture where the business logic resides in a distributed arrangement of servers that can be centrally managed and the applications can be made available through the Web browser to any desktop in the world that can access the Internet. Also, the native implementation of Web-based protocols in this architecture enables easy and open integration with third party applications. These two fundamental differences make the Web architecture a superior way of designing and building business applications. Therefore, most Fortune 2000 businesses have mandated that all new software applications they invest in must have a Web-native architecture. Moving from the client server technologies implementation to a Web architecture for any software is no trivial task. It could take anywhere between 12 and 24 months for the vendor to complete that migration, something that we see our competition engaged in now.
Companies are engaging heavily on managing online customer communications. We're seeing that dot com companies are taking corporate-wide approaches to deploying e-commerce solutions, while large, traditional companies are taking division-wide approaches. Traditional companies tend to have an Internet division that acts like a dot com company.
(J.H., Silicon Valley, California, USA)
Executives have the ability to adapt to e-commerce. However, we see this happening at a very slow pace. I think if the executives of large corporations started to realize what is going on in the planet, they will not be doing business as usual. Instead, they would be working to transform in to Global 2000. They need to get a wakeup call for the third time.
(D.T., Mountain View, California, USA)
In relative terms, the rise of e-commerce has grown
overnight like Jack's beanstalk. The very best answer I can give to your questions
is to recommend the reading of Daniel Goleman's most recent book, 'Working with
Emotional Intelligence.' (http://ei.haygroup.com/default.asp)
Dr.Goleman, psychologist, Harvard PHD, gives clinical evidence of the attributes
of leadership. They are not, as is usually assumed, those of the top student in
the class. The cognitive capabilities do not provide the socially cohesive qualities
needed by a Leader.
In the Industrial era, corporations were primarily family, with the elders supplying the experience and finance, and the younger members exhibiting the enthusiasm and the capacity for risk-taking. Power began emanating from the trade. Universities began setting up business administration departments.
Strategic Planning became the buzz phrase, followed by the Vision Statement and the Mission Statement.
While all this occurred with increasing rapidity, present acceleration is literally mind blowing. Increasingly we hear, "My computer was obsolete, practically before I unpacked it." We are awash in Knowledge Management courses - incubator companies are emerging, designed to provide the variables that the younger entrepreneurs have not as yet experienced. I doubt very much that the Captains of the Industrial era, originators of the assembly lines, held academic seminars concerning the agricultural workers.
(Ruth Pelly M.E.S., Toronto,Canada)
I believe that executives will be forced by economics to use the Internet to keep competitive. They will need to hire or retrain staff that they already have to do the job. The push for e-commerce will come from the marketing department and IT department, company top executives will turn the ownership to themselves because they are the ones that will make the decisions to pay for the changes.(P.E., Burnaby British Columbia, CANADA)