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October 1-15, 1999 MANAGING IT |
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E-COMMERCE Innards of an E-Corporation Hype and projections apart, online commerce is part of a larger evolution in corporate computing whose outlines are only now beginning to become visible By Arthur Coleman
A strange saying but one that resonates within me, because it seems to reflect my experience over 25 years in computing. For me, every new technology seems to follow an evolutionary path that draws a metaphorical circle: creation-introduction-acceptance-obsolescence-replacement by creation of new technology. Yet whenever I complete this circle, I never feel like I'm back at the same place I started. Somehow, the learning gained from working with a new technology opens my mind to new possibilities that did not exist before. After six years of working with the current incarnation of electronic commerce, I am starting to think our industry is coming around full circle once again. Many of my colleagues are beginning to express a perception of electronic commerce as part of a larger evolution in corporate computing. That evolution not only seems destined to bring us back to our starting point but also to take us around the evolutionary circle one more time. Part of a Large Puzzle Electronic commerce is part of a larger evolution from paper-based to automated systems. Business-to-consumer sales on the Web, or business-to-business transactions on the Web or through dedicated lines, represent one piece of the larger automation effort that is under way at many organisations. Supply chain integration, sales-force automation, self-service technical support, online benefits management, data warehousing, collaborative computing, and knowledge management are all pieces of this jigsaw. Taken as a whole, they represent the creation of a new entity-the electronic corporation. The electronic corporation is a computing-centric enterprise that constantly seeks ways to apply new technologies to create new business opportunities. Electronic corporations are organised in such a way, and have a corporate culture so immersed in technology innovation, that new businesses, products, or services cannot be conceived of without computing technology. These types of companies have several attributes:
The corporation has formal processes for identifying and evaluating the potential strategic impact of new technologies on the business. Old Wine in New Bottle In many ways, the concepts behind the electronic corporation are not new. The computing industry has been helping firms automate manual processes and improve efficiencies for years. The difference between the E-corporation and previous automation approaches is one of focus and extent. Historically, automation was seen as a tool to support specific tactical business objectives. In the electronic corporation, technology is a core strategic competence and the foundation on which all business is built. Several companies in the US understand this paradigm and are employing it, often with great success. They include Boeing, Citicorp, Chrysler, CSX, Federal Express, General Electric, Home Depot, McKesson, Norwest Mortgage, RJR Nabisco, and Wal-Mart. These companies come from a wide range of industries but have two things in common. First, they have integrated technology into their strategic business models and corporate cultures. Second, they are, for the most part, the dominant companies in their industries. As yet, no company anywhere is a completely electronic corporation. Not all the technologies are in place yet for this to be possible, and many may not be for ten years. Most of the inter-enterprise applications that are needed to fully link a firm with its customers and vendors will not be in place until after the beginning of the new millennium. Equally important, companies are at different stages in terms of having the skills and processes needed to become electronic corporations. Rules for the E-biz Turn What specific activities are the leaders such as those noted earlier undertaking that may be of interest to your department or your company? There are many. Some of the possibilities are captured in the list below. Annual strategic technology plan. Some corporations regularly undertake a strategic review of available technologies and integrate that plan into a larger corporate strategy. Ongoing technology evaluation processes. Leading companies develop mechanisms for identifying and evaluating new technologies on an ongoing basis. This means having budgets for technology research and a variety of pilot projects. Toleration for skunk works and bottom-up processes. Some of the most innovative applications of technology are not planned. In fact, many savvy technology companies realise computing technology changes so fast that it is almost impossible to forecast where a new innovation may come from. One great anecdotal example comes from Dell, whose entire online business (which represented approximately $700 million in 1997 sales) was conceived by a single engineer who asked if he could put up a server on the Web to see what response he received. The response was so overwhelming that a new division was formed to grow the business. Leaders leave budget available and encourage employees to play with technology to see what they can make happen. Rationalisation to open systems. Companies that have been maintaining multiple systems with multiple code bases and have experienced the cost and frustrations of integrating these systems are turning to open standards such as Java, IIOP, and others to implement their next-generation technologies. This reduces the time/cost for maintaining or upgrading existing systems, allowing firms to respond more quickly to customer needs. Senior management education in technology trends. Leading-edge companies encourage senior managers to spend at least one week per year getting familiar with the latest technology trends affecting their industry. Intranets for outreach. Leaders are providing intranets to their employees to encourage increased information flow between scattered groups or departments. While many companies put up intranets with published information from a central source, the real leaders encourage their people to build departmental and personal Web pages to enhance intra-personnel communication. Technology literacy a recruiting guideline. Leaders put technology literacy requirements in most job descriptions and encourage recruiters to find individuals who can evolve their skills as new technologies become available. Clearly defined areas and goals for outsourcing. Interestingly enough, the leaders in this area are also very savvy about how, where, and when to outsource. I find that these companies know their core technology competencies and know how to find/evaluate outsourcing firms that have complementary competencies. Build a reputation internally for success. Another interesting characteristic of technology leaders is that their MIS organisations approach problems in a way that gives them a high likelihood of succeeding. The reason being that these companies have strong project management and team building skills in the MIS area. These are things you've probably heard before in other contexts. But to quote management guru Peter Drucker, who was told by a CEO that his ideas were nothing new: "If these ideas are so obvious, why haven't you implemented them yet?" So we've come back around the circle once again. Electronic commerce, we now realise, was just one highly visible aspect of an even more critical trend. But we haven't been running in place. The electronic corporation is a new metamorphosis of the work that began with electronic commerce-one that frees us to look more broadly at how technology can play a role at the core of our company's businesses. That, I think you'll agree, makes it much more fun to go to work in the morning and go around the circle one more time. Arthur Coleman, Sun Microsystems manager for online payment systems |
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