“The Critical Role of the CEO & IT Professional in the E-Business Revolution” Presentation By: Dr. John T. Whiting, Director E-Business Enablement Services

“The Critical Role of the CEO & IT Professional in

the E-Business Revolution”

Presentation By: Dr. John T. Whiting, DirectorE-Business Enablement Services

October 27, 2003

IT WorldExpo THE Global Event on Information Technologies

October, 2004

www.e-www.e-businessmanagement.combusinessmanagement.com 2004 © E-BMC/Dr. John T. Whiting

All Rights Reserved Slide 2

The “E-Business Revolution” is Real

•It is bigger and more impacting than the Industrial Revolution.•It is happening more swiftly than most people realize.•It is changing how the world engages in business.•Many companies are not prepared.•Companies that are prepared have a significant competitive advantage.•Companies that are not prepared face the threat of failure.



What is the Force Driving the E-Business Revolution?



Discontinuance*

What is Discontinuance?

Discontinuance occurs when an idea or innovation is so powerful that it causes the discontinuance of the

previous process and replaces that outdated process as the new standard.

See Geoffrey Moore’s Inside the Tornado



IT Discontinuous Innovation1 makes business processes:

1 See Geoffrey Moore’s Inside the Tornado for more on Discontinuous Innovation.

Faster

Easier

More efficient

More cost effective

More profitable.



An Opportunity or Threat to Business

• Experts have stated that the e-business revolution is inevitable!

• Those companies who learn to manage this powerful resource will thrive, but those that ignore this reality will face difficulty competing and many will fail.

• *Source: The Gartner Group



What is “E-Business” and Why is it Inevitable?

E-business is the new enterprise business operating structure emerging from …

“The Fusion of Business & Technology”



Why is E-Business Inevitable?



The History of Discontinuance Driving the Migration of Business to an E-Business Enablement Model

1970

1980

1990

2000

Defense, Science & Research

Finance & Control

JIT Inventory/ERP Management/Bar Codes

E-Commerc

e E-Business

Enablement

LAN/WAN

E-Mail

Internet/WWW

Word Processing

Desk Top PCs

CRM B2BB2E B2M RFID

VOIP

VR etc..com failures

The Hershey ERP Failure

Tim Berners-Lee Launches the 1st

web siteY2K

9/11/01

Discontinued Business ProcessesTechnology Innovation

Paper Ledger Based Accounting

Typewriter

Manual statistical analysis

Physical Inventory Word

Processor Fax, carbon copies, telephone, US mailLibraries, books,

retail buying, etc. US mail, FedEx, Fax

All traditional business processes

Economic slow down

The Proprietary Hardware Era

The Vendor Driven Software Era



…And the Future…



2002

2003

2004

2005

Not E-Business Enabled

E-Business Enabled

Increased:• competitive advantage• sales/market share/reach• efficiency• productivity• customer service• operations mgt.• vendor relations• cost control• communications• profit margins• portal based managementDecreased:• lost sales• lost efficiency• lost productivity• lost customer service• poor operations mgt.• lost vendor relations• poor communications• lost profits• lost competitive advantage

Competitive Advantage

E-Business will provide a competitive advantage.

Will Thrive!

May Fail!



However it is Critical to Get It Right

• What are the consequences that can come from poor e-business decision making?



The Hershey Case Study helps provide an answer….

The Hershey ERP Failure

What happened?

• $115 million ERP system failed July, 1999!

• Third quarter sales dropped 12% as a consequence of not being able to service the Halloween, Christmas & Valentine peak seasons.

• Earnings loss of 18.6% representing a loss of $150 million in sales.• Decline in stock price from $58 to $38 in January 2000



… and what has happened to Hershey since the failure?



Hershey FoodsThe 1999 ERP

FailureY2K Effect

9/11/01

Economic Slowdown, War, Wall Street Problems

ERP Correction Performance 10/02/03



How did Hershey turn it around & what was learned?

• “The business and technology divisions worked more closely together.”• “We made sure there was alignment between information technology

and the business.”• “We had the proper (top) management commitment.”

Lesson #1 - IT decision making must be escalated to the strategic business level based on ROI and performance criteria!

Lesson #2 – IT initiatives must be integrated into the strategic business plan and map to the strategic business goals of the company!

Lesson #3 – IT (E-Business) must be managed at the P&L level!

Source: Philadelphia Inquirer



Y2K and CEO Skepticism Cause a Change in the IT Buyers Market!

What Has Been the Impact on the IT Industry?



Microsoft

July 2000

The Y2K Effect Impact Period



OracleJuly 2000




SAPJuly 2000




People Soft

July 2000




Hewlett Packard

July 2000




JD EdwardsJuly 2000




Computer AssociatesJuly 2000




IBMJuly 2000




SunJuly 2000




NortelJuly 2000




IntelJuly 2000




IBM

July 2000


Economic Slowdown, War, Wall Street Problems, etc.



The IT Industry Profile of Performance

July 2000





Why is the IT Industry Down?

• Y2K absorbed corporate buyer spending dollars making them unavailable for standard purchases.

• CEOs shifted the buyer market from the technical tactical level to the strategic business level.

• IT companies have been slow to modify sales and marketing strategies to accommodate this change;

• CEOs are skeptical of IT sales initiatives due to past experience and the failure of IT to perform;

• CEOs will not listen to a “sales pitch” about technology;• IT companies have not learned how to refine their sales

presentations to present business value based on ROI criteria.



What Will Be the Future for E-Business Enabled Companies?



Visionary Companies have learned they can be more competitive and profitable based on e-

business!



How Have E-Business Enabled Companies Performed?



UnileverEconomic Slowdown, War, Wall Street Problems, etc.

July 2000



UPSEconomic Slowdown, War, Wall Street Problems, etc.

July 2000



Wal-Mart StoresJuly 2000




Waste ManagementEconomic Slowdown, War, Wall Street Problems, etc.

July 2000



Federal Express

July 2000




E-Business Enabled Performance ProfileEconomic Slowdown, War, Wall Street Problems, etc.July 2000

1. Learn how to escalate IT from the tactical technical level to the strategic business level!

2. Learn how to integrate e-business into the strategic business plan!

3. Manage and control e-business resources at the CEO and P&L level based on ROI criteria!

The Challenge Facing CEOs



Are CEOs Spending Money on IT?

• In 2001 corporate buyers paid $3 billion to IBM to outsource e-business resources;

• In 2002 corporate buyers paid $35 billion to IBM to outsource e-business resources!

• What does that tell us?



Is Outsourcing the Answer?



Outsourcing is a Temporary Answer

• Why?

• CEOs don’t like giving a third party control over business operations and information;

• Outsource solutions are “boiler plate” not allowing IT to be customized to the unique needs of the company;

• Outsourcing is expensive!



What will Cause CEOs to End Outsourcing?

• When they learn they can bring IT “in-house” cost effectively based on a methodology they can trust!



What is Preventing CEOs from Becoming E-Business Enabled?



The Problem:• Historically CEOs have limited skill in the use of technology, how it can be used to drive their business and have isolated themselves from Technical Professionals;

• Technical Professionals have limited business expertise and limited capacity to advise CEOs on how the company can use technology to improve business performance!

• This has created a barrier preventing many companies from effectively leveraging technology producing a threat to the performance and survival of some businesses.



The Challenge Facing the IT Professional

• IT professionals have little, if any training in business and business management principles;

• IT professionals have a preference for IT problem solving versus business decision making;

• IT professionals have no incentive to initiate e-business enablement initiatives;

• IT professionals may tend to see e-business enablement as a threat to their level of expertise and job security.



What Should IT Professionals Do?

• The e-business revolution is inevitable!

• IT professionals should take affirmative action to influence and add value to the company by helping the company achieve e-business enablement;

• IT professionals must ask the question, “Who will the CEO blame if the company looses competitive advantage to an enabled competitor?”



The Solution:

• The IND E-Business Enablement Methodology™ is a “Road Map” to guide CEO’s in achieving:

the escalation of IT from the tactical and technical level to the strategic business level:

the integration of IT into the company’s strategic business plan;

the ability to manage IT at the CEO level with ease based on ROI criteria.

The IND Methodology bridges the gap between business and technology!



The IND Methodology Provides CEOs with a decision making model they can understand!



The IND E-Business Enablement Methodology™

Phase I -

Phase II -

Phase III -

Phase IV -

Phase V -

Gathering of Baseline Data to Identify E-Business Enablement Status:Business Policy StatusTechnology/User Status

E-Business Enablement Plan (EBEP) Development and Targeting

of ROI Projects

Prescription of Intra-Function(s) ROI “E” Projects

Full Intra Function E-Business Enablement

Full Enterprise Inter-Function E-Business Enablement

Discovery of “E” Status, Discrepancy and Needs

Diagnosis of Status for EBEP and to Target ROI Priorities

ROI Project Identification Within Key Business Functions

Expanded ROI Projects to Achieve Full Function Enablement

The Full Integration of IT/Internet E-Business Technology Across All Enterprise Business

Functions

Note: The process is continuous allowing for strategic planning and budgeting!

Web based E-Business Enhancements



The E-BMC Methodology is Based on MBO and ROI Criteria!



Analysis

Market Market

Determination

Marketing

Marketing Research Sales Promotion Marketing Planning

Sales Operations &Administration

Sales PolicyDetermination

Forecasting

PricingBuying

Packaging

ProgramDevelopment

SalesAids

SalesmenRecruitment

Salesmen Training

SalesmenDirection

Salesmen

CompensationOrder

Servicing

DirectSales

Advertising

Campaign

Planning

MediaSelection

CopyPreparation

Production

Requirement

DistributionProblem

Analysis

Marketing Research Marketing PlanningSales Promotions

Sales OperationsAdvertising

Marketing

Web based Market

Requirement Determination

Web based Market Analysis

Direct Sales

$ Power of and E-Business Web Services

Sales Training

Sales Direction

Order Servicing



Planning

Purchase

Expediting Factory

Receiving

Facility

Physical Distribution/Customer Service

Distribution Planning Material Management Operations

Transportation Operations

Warehousing

Strategy OperationsPlanning

Location& Design

WarehouseLocation &

Layout

ManpowerPlanning

& Control

ServicePerformance

ManagementSystems

OrderProcessing

DistributionControls

Customer &ProductService

Traffic Management

Private FleetManagement

Forecasting Procurement &

InventoryControl

PackagingEngineering

Scheduling

Communication & ManagementSystems & Operations

Logistics/Customer Service

Distribution Planning Communication & Management Systems & Operations

Materials Management Operations

Supply & Storage

Service Delivery

Distribution Controls

Customer Service

Purchasing

ManagementSystems

Receiving

OrderProcessing

Forecasting ProcurementScheduling

InventoryControl

StrategyPlanning

OperationsPlanning

…leading to gains in efficiency and competitive advantage!

Manpower Planning

FacilityUtilization

ServicePerformance

Storage Location& Layout

Engineering

Scheduling Monitoring &Evaluation

How? Instant access to information!



The goal: Quality management based on instant access to information across the e-business enterprise 60/24/7

* Source: E-BMC White Paper

P&L Portal Based Management

E-Business Transformation Officer

Operations Management

R&D Production Logistics MarketingFinance &

ControlHuman

Resource

(Total Enterprise Interconnectivity)

CEO Monitors Company Performance Via “E” Portal

Interoperability

ReturnBack 2



Becoming E-Business Enabled is a Complex Task!



The E-BMC Methodology Provides Standards to Guide Decision Making CEOs Can Relate To!



The Technology Adoption Life Cycle (TALC) Answers Key Questions:

• What technology should I buy;• When should I buy it?



Technical Enthusias

ts

Visionaries

Pragmatists (Business

Users)

Conservatives

Skeptics

5 years +/-

Early Market Main Market

Level of Acceptance

100 %

0 %

2 to 3 years

Changing IT Buyers Over the Life Cycle

Declining Market

Time

Source: Inside the Tornado

High Risk

Low ROILow Risk & High ROI

The Technology Adoption Life Cycle (TALC)



The Open Systems Interconnection (OSI) Model Answers Additional Questions:

• What technology will complement our e-business enablement strategy;

• Why doesn’t legacy technology work?• What are the risks associated with proprietary IT and IT service

provider “Specialists’?



The Open Systems Interconnection Standard (OSI)

Layer 1 Physical Layer Transmission of raw data over physical medium (cable)

Data Link Layer

Network Layer

Transport Layer

Session Layer

Presentation Layer

Application Layer

Layer 2

Layer 3

Layer 4

Layer 5

Layer 6

Layer 7

Transfer of error free data between computers via the physical layer

Addresses, traffic & routing determination protocols

Protocols to open, maintain, close an information exchange

Protocols to open, maintain, close an information exchange

Format, translation, syntax, encoding & compression protocols

Protocols that allow application processes to communicate

The “E” System =

Forward

Web Age Solutions

Equant

Klee Group

OrtemsSSA GT



What Are the Basic Elements of E-Business Enablement?

• Corporate policy change regarding IT decision making and use;

• Core standards based technology:

1. Enterprise network & network management;

2. Security, backup & disaster recovery;

3. Data centralization, management and sharing;

4. Application integration across all business functions.



E-BMC Mission is to …

• Ensure client business viability by the knowledge transfer and e-business enablement service

essential to remaining strong and competitive!



The Goal: E-BMC partnering with CEOs and IT Professionals to achieve the benefits that can come from

e-business enablement!



Discussion



Dr. John T. Whiting, Director

E-Business Enablement Services

973-764-0375

[email protected]

http://www.e-businessmanagement.com

E-BMC Contact

Documents

“The Critical Role of the CEO & IT Professional in the E-Business Revolution” Presentation By: Dr. John T. Whiting, Director E-Business Enablement Services