E-business Report Card

Software Magazine, Dec, 2000 by Chris Pickering

It should be mentioned that no technology, with the exception of the Internet, is used by all companies. This speaks to two aspects of technology usage. First, no technology has proved so valuable that everyone feels compelled to adopt it. Second, technologies are tools, suitable for some jobs but not for others. Part of e-business success is matching the right tool to the job.

Organizing for E-business

To support its company's e-business efforts, IT must collaborate with the business side of the house. This collaboration should occur at various levels--from strategic planning through implementation and execution. Collaboration should also occur in various ways--reporting structures, joint development teams, and so on.

Two-thirds of respondents are organized so the CIO reports to senior business management: for 57% the CIO reports to the CEO and for 10% the CIO reports to the COO; for another 6% of respondents the CEO is the CIO; and 9% of respondents say that the CIO reports to the CFO. Given the emphasis during the last 20 years on raising IT to the boardroom, it would be surprising if few CIOs reported to CEOs and COOs. What is surprising, however, is that 9% still report to the top financial officer. This structure harkens back to the early days of data processing, when computers were used primarily to support back-room accounting functions. Since one of the consequences of such a reporting structure is often an extreme cost focus with minimal concern for responsiveness and adaptability, it is unlikely that companies organized this way are prepared to respond to the constantly changing demands of e-business.

Consistent with most CIOs' positions in their organizations, the CIO is a member of the strategic planning group for 85% of respondents. Where this is the case, several other senior IT executives (usually five to seven) are also typically part of the strategic planning effort.

E-business often requires significant organizational change, and many companies establish special groups to promote e-business success amidst the turmoil. Among survey respondents, 69% of those doing e-business have a group dedicated to promoting e-business. Most of these groups are small to medium-size: 56% have one to five people; 10% have six to 10; 23% have 11 to 25; and only 8% have more than 50 people.

Up and Down the Supply Chain

With 42% of respondents doing e-business, 51% of respondents using Java, and similar figures for many other e-business technologies, it seems that e-business is well on its way to broad adoption. This is true at the level of point solutions (Web-based ordering, self-service HR, etc.), but when more complex e-business functions like e-SCM (electronic supply chain management) are considered, the picture changes considerably. A much smaller segment of the industry is using complex applications.

In early 2000, 2% of industry was using e-SCM. By late summer 2000, that figure had grown to 16%. This was the time period when e-SCM really began to catch on. Where it goes from here remains to be seen. Early projects have had mixed results, and much of industry is only marginally prepared to take advantage of e-SCM. With applications like e-SCM that require the cooperation of other companies, it is obvious that a company's trading partners--both customers and suppliers--must be ready for e-business if the company is to have much success using the application. As things stand now, both customer readiness and supplier readiness stand in the way of the rapid adoption of e-SCM and other complex, intercompany e-business functions.