Peer Pressure

Peer Pressure

What identifies a business as sufficiently well tuned to withstand and prosper from e-business initiatives is still being determined, Wilton says, but he suggests a few likely indicators of readiness. One is a corporation where 60 to 70 per cent of customers "believe that your value proposition to customers is superior, which is the case with Southwest and many of GE's business units".

Companies with a history of generating superior returns to shareholders are also probably better prepared to turbo-charge the business with e-business techniques, as are those that have finely managed underlying business processes. "This is crucial," says Wilton. "If your underlying processes - manufacturing, customer service, order placement, order fulfilment, logistics are at less than Six Sigma, then to e-enable the business would be the equivalent of turbo-charging a car that's ill-tuned."

Wilton notes that it is sometimes possible to bootstrap one of the underlying processes toward Six Sigma efficiency using online techniques. He offers as an example Dell which has made its order placement system high quality by moving it online. Nevertheless, he believes that before embarking on a holistic e-business campaign a company needs to ensure its underlying processes work at maximum efficiency. And that is a task best served by the CIO, the person most likely responsible for fitting the corporate turbo-charger.

"The CIO needs to be a business-oriented person," Wilton says. "You must have information technologists who are extremely business savvy, who are able to engage in a dialogue with their counterparts in the business; who will tell them that it would not be a good investment to do this unless [the business has] the underlying processes at Six Sigma; and to understand which processes affect the business value.

"Companies that are good at this, well they know what the value-driving processes are. They e-enable those processes that can have a huge positive impact on profit. Now if those processes are not at Six Sigma and they try and e-enable everything, it's the equivalent of steroids for a poor-performing athlete."

Wilton admits that, as yet, the science or discipline of e-enabling a business effectively is not particularly well understood and lingering CEO scepticism over e-business is being propped up by the mountain of media coverage about the tech wreck. "CEOs are seeing all the talk about failures and they're not prepared to look for the silent achievers that are making these great strides," he says.

Wilton does expect it will take time to overcome the lingering scepticism, but some CEOs might get lucky and understand the advantages earlier than others. Again this is where the smart CIO can play a role. "You could say it was generational, but then in reality look at Jack Welch; he is not a young man. He is part of the retiring generation and he underwent a transformation - up until two and a half years ago he hadn't even sent an e-mail."

Wilton says that a chance meeting on the golf course between Sun Microsystems' CEO Scott McNealy and Welch delivered the legendary GE chairman and CEO's e-business epiphany. But not every CEO can expect or hope for exposure to that level of golf course chat, so it's often up to the corporate CIO to act the evangelist.

Wilton, however, worries that too few CIOs are able to explain the potential benefits of e-business enablement at a strategic level to their CEOs because they remain focused on the technology rather than the strategy.

"Practically there is a lot of research being done examining the conditions that support successful e-enablement. There is a lot being written up about it - but it's in the business journals rather than the technology journals and you do need to be aware of that."

"I think you need to be as a CIO committed towards understanding the real strategic drivers of the business first, and then you can perhaps better understand where to e-enable and where not to e-enable. So CIOs need to become more business strategic," Wilton says. "Many of them seem to think that that's a role someone else should take on, but that is basically short-changing their own role. The question is really who should guide the organisation in terms of its e-business potential. If you look around, that mantle is very likely to fall to the CIO, and if it doesn't it will fall to the business units.

"Now the business units equally need to be technology savvy. You've got a lot of business units that drive e-business, and that's the way it is in General Electric, but the reason it's working there is that the business unit managers are IT savvy. So it's a two way street. That's one of the conditions we think is necessary to get a great return on e-business in a traditional corporation: have business unit managers who are IT savvy so that they can envision what is possible.

"So it's getting closer alignment between IT and business units' strategy, but someone's got to lead that charge and it's certainly possible for the IT managers to lead. Some already do and for those guys perhaps we're talking about raising the level of intensity and of integration [to maximise the benefits]. For those CIOs who aren't doing it, they need to start ramping up their strategic skills and their business strategy skills, and there are many ways they can do that," he says.

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