I have tried to distinguish e-business from E-Business. When it is to
be a separate department, it is capitalized, when it is a responsibility
of IT it is lower case. Except for IT, we do not usually capitalize departments
in the context of an article, for example, marketing, sales, operations,
Many companies separated their early organizational effort in e-business
from the traditional IT function.Often, a company's Web presence was developed
and managed by its marketing department. The IT function was viewed as
"too slow" and "too busy" to be involved. Companies turned to outside
resources in the early planning and development of the company's Web sales
brochure and the ensuing enhanced Web sites.
the dot-com frenzy, some companies created new organizational structures
to manage e-business. Is that approach still valid? In this paper we explore
the organizational approaches that companies might take to e`-business
in the context of today's business environment.
You Want E-Business to be a New Major Initiative?
The initial management reaction to major changes in the business environment
has traditionally been to create a position in the organization that is
the focal point of the change. Over the years, a number of "C-level" positions
have been created to focus organizations on everything from information
(CIOs) to customers (CCOs) to technology (CTOs) to marketing (CMOs).
drives companies to set up these positions? Often, when a company feels
it needs to focus more intense management scrutiny on a business discipline
it creates a position that has over-arching responsibility across the
enterprise. In traditional management theory, any position must be vested
with the triad of Responsibility, Authority, and Accountability to manage
a business function. Positions need to be vested with all three attributes
if they are going to be able to work effectively in the organization.
an organization with E-Business Responsibility, Authority, and Accountability
for the company's E-business activities will tend to move new technology
leadership away from other functional groups. A separate E-Business organization
will have the effect of:
E-Business activities across the company, thus reducing the ability
of any one department to operate independently
another interface in relationships with suppliers, customers, and internal
departments to promote the companies E-business agenda.
the priorities of IT by creating a powerful lobby for IT resources,
thus competing with other corporate IT priorities
If the company
creates a separate E-Business organization, the existing functional departments
that have E-Business initiatives will find that their initiatives will
be subject to the agenda of the new E-Business initiative. No question,
creating an E-Business position will set up E-Business as a major strategic
initiative in the company.
If a company
feels that the emergence of E-Business will have a profound impact on
its ongoing business, with the potential to transform the company, then
they certainly should set up E-Business as a separate functional group.
However there are some issues that will develop. When a company establishes
E-Business as a separate department, a potential conflict may develop
with the traditional IT department. IT resources are prioritized across
the company and E-Business, given its executive charter, may need more
resources than IT is able to deliver. The second phase of E-Business could
be to set up a staff of analysts and programmers to concentrate on just
it would be ideal if companies could "bake" an E-Business strategy into
ALL of the functional groups and incorporate E-Business opportunities
into the mainstream of corporate planning. The problem is that organizational
change often requires that management provide the company with strong
signals that the new tool or technique is important. A high profile appointment
of an evangelist with the requisite staff is often the obvious and simple
E-Business is Not a Major Initiative, Where Does It Fit?
If an E-Business position is going to be established as only an advisory,
strategic planning function, then the limited scope of that position will
affect where the position should report in an organization.
when new methods of improving business practices are developed, there
may not be an obvious place to put them in the organization. All the recent
management trends from Continuous Improvement to Business Process Re-engineering
have had the same issue we see with E-Business. They have enterprise-wide
implications and tend to become part of the corporate department that
started the initiative.
sized companies should take care in the amount of organizational emphasis
they give to improvement tools like e-business if they do not think that
their business will be fundamentally transformed by the initiative. Dan
Palumbo, Manager of Information Technology at the ConAgra subsidiary
Lamb-Weston, found that, "all of our E-business initiatives so
far have involved putting new technology to existing business relationships."
Palumbo found his IT resources adequate to handle the e-business initiatives,
"E-business hasn't been about getting new business, its just changing
the technology we use when we work with the suppliers and customers that
we have always worked with".
e-business initiatives are developing at a time that companies are making
major changes in their allocation of resources to IT. Many mid-sized companies
have determined that their e-business initiative should be managed within
the IT structure. Assigning e-business responsibility to IT will tend
to have the effect of:
e-business plans into "information technology centric" projects.
the IT department's focus on business process improvement activities.
some internal conflicts if IT is viewed as unresponsive.
E-Business technology will continue to be a powerful business tool. Companies
need to consider the potential of E-Business in their strategic planning
processes. When they determine that there is a business case to use E-Business
technology to significantly change the way they do business, then they
need to create and staff a highly visible organization and place it at
an appropriate level in the company. The staff should include the technical
IT resources that will be required.
a company finds that e-business technologies should lead to more evolutionary
change then e-business should become part of the IT department's deliverables.
Adding the e-business responsibility to IT will enhance the IT's organizational
position. With e-business responsibility, the IT organization will tend
to build on its consultative relationships with the rest of the organization.
a company is in doubt about the strategic importance of e-business it
should consider starting out by creating e-business responsibility in
the IT department. If, over time, it is determined that E-Business should
be a separate department that move can easily be made. Creating a separate
E-Business department when the strategic importance of E-Business technology
is not well understood may undermine the current IT organization and set
up the E-Business group for failure.
William R. Friend is a principal of WR Friend & Associates, a business
process consulting firm. With over 25 years experience in the food and
chemical industries, his business background includes executive positions
in Supply Chain Management, Information Technology, Logistics, Production
Planning, Purchasing, and Labor Relations. He is an award winning speaker
and writer on topics related to the application of technology in solving
can be reached at firstname.lastname@example.org.