VideoWithout a business unit dedicated to E-business, says Dilts, duplication of effort--or worse, paralysis--would result. "In a company as large as ours," he says, "there's a sort of highway system of processes and functions. Add to that the fact that all kinds of information must flow to and from various people and departments, and you see how an entity like DCX Net can act as a think tank, coordinating the E-business activities of all the operating units."
But Dilts is quick to point out that DCX Net works closely with, and depends on, the core IT operations of the company, which are overseen by senior vice president and CIO Susan J. Unger. "The IT group can't be separate," says Dilts. "That's why we named the new version 'Net.' It can't be completely off to the side, or it will fail."
Unger has made a number of organizational changes to her global IT operation over the past two years that were intended
to boost Chrysler's, and then DaimlerChrysler's, nimbleness. Many functions have been centralized, and "centers of competency" have been formed to exploit customer relationship management and other new technology initiatives. At the same time, regional IT departments have been encouraged to produce templates of new applications they develop so that they can be shared with other regions. In Europe, for example, the IT group developed an electronic-parts catalog for dealers. "We saw it, loved it, and quickly rolled it out in the [United States]," says Unger.
Even though her group began studying best practices in E-business more than two years ago, Unger welcomes the creation of DCX Net. "So many initiatives cut across all parts of the organization," she says, "that it's very helpful to have a group that can address roadblocks and boundaries." Unger believes that it's also important that such a group be kept small and essentially virtual. "Some other companies have created huge E-business units with total responsibility for all efforts," she says, "only to slowly fold certain operations back into the parent company. We plan to avoid that."
The Need for Speed
With $151 billion in worldwide revenue, DaimlerChrysler has both the need and the resources for a dedicated E-business unit. But smaller companies have taken a similar, albeit scaled-down, approach to structuring themselves for the E-business age. At diversified industrial company Ingersoll-Rand, in Woodcliff Lake, New Jersey (1999 sales: $7.67 billion), CEO Herbert Henkel and CFO David Devonshire divided the IT organization into two groups: one charged with E-business, the other focused on traditional IT issues. The prime motivator: speed.
"We had completed our long-range planning," says Devonshire, "but we missed E-commerce. It came out of the blue. Suddenly there were all these new B2B opportunities, and we risked missing them."
Hoping to not simply catch up with but leapfrog his competitors, Devonshire tapped Rone Lewis to head the E-business unit. With three successful start-ups under his belt, Lewis knew a thing or two about moving fast. But while DaimlerChrysler's DCX Net employs hundreds, Lewis's team consists of only a handful of people. "We've got 850 people in our IT department," says Devonshire. "They provide the services, while Lewis and his team talk to all the divisions within the company and see what we need to compete."
Since it was initiated 11 months ago, the system has worked remarkably well, according to Devonshire. Ingersoll-Rand is now participating in a used-equipment Web exchange, and has several other E-business efforts under way that address everything from safer schools (Ingersoll-Rand makes a wide range of access and security products) to manufacturing partnerships. "We feel good about where we are," says Devonshire. It's a sure bet that E-business will figure prominently in the company's next five-year plan.
"We've put more than 700 managers through our E-business training course," Lewis says. "We want to leverage the Web to build customer loyalty, improve productivity, and cut costs. It's become an integral part of everything we do."
Disruptive or Sustaining?
In many respects, E-business makes the same demands on corporate strategy as the "disruptive technologies" made famous in Clayton Christensen's The Innovator's Dilemma. In that 1997 book, Christensen, a professor at Harvard Business School, explored the reasons why new technologies so often catch big companies off guard--even those that possess every seeming resource needed to capitalize on those technologies.
"To a large degree, the Internet is similar," says Christensen. "But in organizing for it, companies need to understand that it is not one size fits all, because the Internet will be a disruptive technology for some companies, but a sustaining technology for others."
Christensen points to the widely divergent experiences of Dell Computer Corp. and Compaq Computer Corp. For Dell, already organized to accept orders directly via phone, fax, and mail, Web-based ordering was a logical extension of existing practices. But for Compaq, the appearance of a new distribution channel was profoundly disruptive, because the company had achieved dominance in the retail space and now had to understand how the Internet would affect its business model. The question for Compaq, therefore, was far more complex, says Christensen.
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