Several weeks ago, Raymond Pawlicki, vice president and chief information officer of Novartis Pharmaceuticals Corp., was preparing for a meeting of the IT steering committee at which the company's CEO, CFO, and heads of sales and marketing would be briefed on the company's major IT projects. As he studied the agenda, Pawlicki was struck by something. "Even though these projects addressed widely divergent needs within the company," he says, "on a macro level, they had one common characteristic: four were pure E-business projects, and the other two had strong E-business implications."
Even as recently as a year ago, E-business did not dominate corporate strategy sessions to such a degree. Today, at Novartis and elsewhere, it's become hard to separate it from plain old business. But the pressure to rewire just about every business activity imaginable with Internet technologies is having considerable impact on corporate IT organizations.
Indeed, there is evidence that many companies are floundering. A survey of 53 CEOs conducted by Transition Partners Co., a Reston, Virginia-based consulting firm, found that only half the respondents consider their IT departments to be stable. The remainder said that shifting business strategies, competitive pressure, turnover, and other factors have left their technology organizations in flux.
Does the advent of E-business require substantial organizational change? Many companies now say yes, but there's no consensus on how to restructure to best advantage. "We advocate putting the development function within IT, but in a separate unit focused on E-business," says Tom Pettibone, a partner in Transition Partners and former senior vice president and CIO at Philip Morris Cos. and New York Life Insurance Co. That's one answer, and a number of companies, such as Ingersoll-Rand Co., are doing just that. Some companies are critical of this approach, while others embrace first one answer, then another, suggesting that in the Internet Age, technology isn't the only thing that changes constantly.
From IT to E-IT
While E-business often receives special treatment within the walls of organizations, some companies insist that the proper approach is to embed the necessary skills and expertise within the existing structure. At Novartis, CIO Pawlicki argues that "because E-business will soon be pervasive, we need to transform our IT department into an 'E-IT' department. We want a full convergence of E-business projects and traditional IT projects, and you can't do that with two separate IT organizations."
Making that happen depends largely on training or, more accurately, retraining. "Our approach runs counter to the way most companies are doing it," says Pawlicki, alluding to the widely held belief that the way to get a new E-business system up and running is to hire people with Java or other Webcentric skills and throw them at the task posthaste. When Novartis decided to create a Web-based order management system that would let customers check order status and related details, it took existing programmers skilled in the arcane art of RPG programming and trained them to work with new Java-based and Microsoft E-commerce software. "It's not true that mainstream IT people can't cut it in an E-business world," says Pawlicki. "Our people responded extremely well, and it was great for everyone's morale."
But if Novartis has decided to forgo a separate E-business IT unit, that doesn't mean it hasn't made fundamental changes to its organizational structure. Those veteran RPG programmers were coached by a group of what Pawlicki terms "mentors," including some new hires schooled in the latest technologies. He expects that over the next 18 months, this system will become the norm across the IT spectrum, from computer security to infrastructure issues to managing relationships with hosting providers.
"This is the way to get knowledge about new ways of doing things to permeate the entire organization," says Pawlicki. "It's how to make E-business the heart and soul of IT."
Creating Separate Units
Other companies have decided that separate units devoted to E-business, which draw on talent from across the organization, are the solution. General Motors Corp., for example, launched e-GM in August 1999, while DaimlerChrysler created DCX Net just two months ago. Both automakers hope to get traction in E-commerce by uniting a variety of efforts, from Web-based consumer marketing to participation in trading exchanges to investment in Internet technologies, in one organization. While these units employ hundreds and have money to burn (DCX Net Holdings, for example, has $500 million to invest in E-business companies and technologies), they are not stand-alone entities. Each has ties to various areas within the parent company, relying on it for core IT functionality and other forms of support.
Given such close cooperation--which includes cross-functional teams, dotted-line reporting relationships, and various forms of resource sharing--one might ask, why create a separate organization at all? Gary Dilts, senior vice president for the eConnect platform at DCX Net, says that by charging a separate unit with E-commerce success, DaimlerChrysler can "take good ideas from anywhere within the company, prioritize them, and make them happen."
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