Anyone with an interest in the way management methodologies and business thinking evolves would agree that the era of e-business, however you define it, is having a huge impact on how companies are run.
One person with such an interest is Professor David Feeny, vice president of Templeton College at Oxford University and director of the Oxford Institute of Information Management. During the past year he has been conducting research into leading established companies in the US, Europe, Singapore and Australia, looking at both the nature of e-business opportunities and the management roles and processes required to capture it.
He has discovered that almost every company, regardless of geography, has accepted the importance of technology at a leadership level only in the past year. And often the job of persuading the president or CEO of a company of the importance of bringing technology issues out of the back room has fallen to someone outside of the very top tier of management.
“Within an organization there exists those enthusiasts and sceptics that will continue a guerilla war, unless and until the CEO makes a commitment and says ‘this is something we’re going to take very seriously’,” says Feeny.
Outside in
It is often the senior IT person within a company who has pushed for transformation through technology at traditional companies, but in the past they have usually been outside of the senior management level. But Feeny's research has shown that things are gradually changing and chief information officers (CIOs) are taking their place in upper management and moving from pure operational responsibilities to helping other management get a more complete picture of potential business strategies.
“You need that link into the whole delivery of the technology, that integration of all the business thinking reflected in the action, the technology function,” he says.
But when the CEO does come around to believing that IT investments can enable fundamental change for the better within a company, the CIO’s work has only just begun.
“If the CEO now says technology is vital to the future of the business, the idea of being constrained by the resources of a particular IT department no longer makes any sense,” says Feeny. So the CEO is now saying to the CIO, part of your job now is to know how to access all the resources of the marketplace in an effective way – to tap into outside skills and expertise.
Inside out
One danger for chief financial officers, (CFOs) is that they are, by nature, internally oriented. They are constantly looking at the internal operations and the efficiency of those internal operations within the organization, and short-term worries about their company's share price.
“The only things that are important in terms of finding the new business thinking are when you look at customers, competitors and the way an industry works. Many CFOs are perfectly capable of doing that.”
But, he says, they do need to understand that for technology projects especially you have to create much more of an enabling budget and speedy funding, rather than demand specific cases and strict 12 to15 month budgeting and planning cycles.
The other danger is, particularly up until recently, the ridiculous valuations of dotcom activity. Some corporations prompted by CFOs, and indeed CEOs, thought they could create shareholder value by creating a little dotcom activity with the potential to sell all or part of it off to create some high price paper. But according to Feeny: “Very often these have been a diversion from what the company actually should have been doing, and taken management energy to the detriment of the corporation as a whole.”
Teamwork
You have to consider the culture of the organization as you go into e-business as well as the organizational arrangements, says Feeny. Instead of a hierarchical and mechanistic culture where everyone’s job and domains are defined, it’s now absolutely essential that the management team is a team, bringing their perspectives to bear on issues rather than fighting for a result for their particular function.
The best companies, says Feeny, have gone back to the basics of their business and thought about how to achieve competitive advantage in that business, and they’ve discovered that technology might play a key role.
“Even in an industry like oil, for example, you can see a major difference between a BP Amoco, where the CEO John Brown has become an IT believer and made that equation in his mind between what’s important for the business and technology, and other oil majors who have still positioned technology as being much more about the back room and perhaps just tidying up that back room with a few hundred million dollars worth of ERP systems.”
