| BUSINESSWEEK ONLINE : AUGUST 28, 2000 ISSUE | |||||
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| THE 21ST CENTURY CORPORATION -- THE NEW LEADERSHIP
From Gearhead to Grand High Pooh-Bah The new chief Web officer will work hand in hand with the CEO to retool the company into an e-business For most of the 50 years that computers have mattered, the folks who ran the data-processing machines down in the bowels of an organization were no more celebrated than plumbers and electricians. Sure, they dealt with esoteric equipment and had a certain techie mystique, but as countless ''Dilbert'' cartoons attest, they were mostly derided as clueless nerds who got in the way of every creative or risky endeavor. The bad attitude went all the way to the top: Senior executives tended to view their own computer departments as little more than an expense item on the annual budget. Things got a little better for gearheads in the 1990s. With the emergence of sophisticated management software and PCs on every desktop, many companies elevated data-processing managers to the swankier job of chief information officer, responsible both for running computer systems and devising long-term information strategies. This executive could emerge as the CEO's most important lieutenant, working hand in hand to retool companies into e-businesses. Like today's CIO, the chief Web officer will oversee information systems and strategies--which, by definition, will be based on Internet technology. But, in addition, he or she will create and manage an interwoven web of business relationships made possible by communications technology. Analyst Marianne Broadbent of researcher Gartner Group calls this ''managing the extrastructure,'' or forging flexible e-links between an organization and its partners, suppliers, and customers. Technology and partnerships can't work well without each other--and leaving them in separate hands risks failing to exploit the Net's potential for radically transforming business processes. ''STRATEGIC PARTNER.'' Some leading-edge companies have already made steps toward this new management model. At General Electric Co. (GE), for instance, CIO Gary Reiner manages both information technology and GE's massive procurement program, working closely with suppliers to get them online. At networking giant Cisco Systems Inc. (CSCO), CIO Peter Solvik spearheads the company's e-sales and e-supply-chain initiatives, focusing nearly half of his time on relationships with outside partners. And Charles Schwab & Co. (SCH) CIO Dawn G. Lepore, mastermind of the company's widely praised move to the Web, says she is ''involved in virtually every partnership or contract'' set up by the discount brokerage. The role of the top information executive, says Cisco CEO John T. Chambers, ''has been elevated to that of a strategic partner with the CEO and CFO.'' For companies that recognize the strategic importance of the Net and appoint leaders to exploit it, the payoff can be enormous. At GE, says Reiner, a customer inquiry that used to cost $80 to handle over the phone costs just 50 cents via the Web. With savings like that, analysts figure GE will slash expenses by hundreds of millions this year, while pushing more than $5 billion worth of purchases through the electronic systems Reiner put in place. The same goes for Delta Air Lines (DAL), where selling a ticket online costs one-quarter as much as a travel agent sale. Delta saved more than $100 million last year thanks to e-commerce, says CFO Edward H. West, who manages the company's online initiatives. Achieving such results relies on making the Net a strategic priority. A company's top information officer ''has to stop being the mastermind of the engine room and get up on the bridge of the ship,'' says Ben S. Levitan, chief operating officer of Net consulting firm Viant Corp. (VIAN). But the transition to chief Web officer isn't always easy. Even though CIOs entered the upper ranks of executives in the '90s, the departments they ran were ''still the servant of the business,'' says Harvard Business School professor Robert Austin. Indeed, many CIOs still focus on running internal computer systems, he says, even though ''the more exciting stuff is being done elsewhere.'' TURF WARS. That stuff--Web sites, e-commerce, online customer support--often bubbles up from skunkworks scattered around a company. Or, it falls under an ''e-czar'' who bypasses the CIO to report directly to the chief executive. After all, says Viant's Levitan, ''If you're a CEO who's had an Internet epiphany, you're not going to turn it all over to the guy who's been running the accounting systems.'' In the coming years, the CIO and e-czar should morph into one. Companies that fail to move in this direction run the risk of turf wars between execs or between line managers launching their own e-commerce initiatives and IT departments charged with keeping corporate digital systems in prime condition. Indeed, the companies most successful on the Net are moving to knit together their info systems and e-commerce strategies. Delta, for instance, rebuilt its whole corporate computing system around a single set of technical standards to simplify deployment of e-commerce programs. The job required close cooperation between CFO West, who oversees Web strategy, and Delta CIO Robert DeRodes, who's responsible for putting the company's e-commerce program into effect. Now, to harvest more dollars from the 117 million passengers it serves each year, Delta has set up a Net incubator to nurture new business ideas. The group has cooked up plans for airborne e-shopping, info kiosks, wireless Net access in airport lounges, and speedy broadband links in airport clubs. So far, none is contributing incremental revenues, but West figures such initiatives may contribute $2 billion to Delta's top line in 2002. The key for any company hoping to build business on the Web is to spot opportunities early and exploit them fast. That can't happen if they follow the old, internally focused CIO model. But by fostering a culture of rapid change and experimentation, and empowering chief Web officers, chief executives can help ensure that their businesses are ready to tackle the challenges of the 21st century. They won't have to do all the hard stuff alone. By ANDY REINHARDT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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