“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, Director E-Business Enablement Services October 27, 2003 IT WorldExpo THE Global Event on Information Technologies October, 2004

www.e-businessmanagement.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.

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 4 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when an idea or innovation is so powerful that it causes the discontinuance of the previous process and replaces that outdated process as the new standard.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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 5 IT Discontinuous Innovation 1 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.

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 6 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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 7 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”

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 9 The History of Discontinuance Driving the Migration of Business to an E-Business Enablement Model 1970198019902000 Defense, Science & Research Finance & Control JIT Inventory/ERP Management/Bar Codes E-Commerce E-Business Enablement LAN/WAN E-Mail Internet/WWW Word Processing Desk Top PCs CRM B2B B2E B2M RFID VOIP VR etc..com failures The Hershey ERP Failure Tim Berners-Lee Launches the 1 st web site Y2K 9/11/01 Discontinued Business Processes Technology Innovation Paper Ledger Based Accounting Typewriter Manual statistical analysis Physical Inventory Word Processor Fax, carbon copies, telephone, US mail Libraries, books, retail buying, etc. US mail, FedEx, Fax All traditional business processes Economic slow down The Proprietary Hardware Era The Vendor Driven Software Era

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 11 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 management Decreased: 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!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 12 However it is Critical to Get It Right What are the consequences that can come from poor e-business decision making?

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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 16 Hershey Foods The 1999 ERP Failure Y2K Effect 9/11/01 Economic Slowdown, War, Wall Street Problems ERP Correction Performance 10/02/03

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 17 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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 31 The IT Industry Profile of Performance July 2000 Economic Slowdown, War, Wall Street Problems, etc. The Y2K Effect Impact Period

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 32 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.

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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 43 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?

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 45 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!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 46 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!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 48 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.

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 49 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.

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 50 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?”

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 51 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!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 53 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 Status  Technology/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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 55 Marketing Research Marketing PlanningSales Promotions Sales Operations Advertising 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

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 56 Logistics/Customer Service Distribution Planning Communication & Management Systems & Operations Materials Management Operations Supply & Storage Service Delivery Distribution Controls Customer Service Purchasing Management Systems Receiving Order Processing Forecasting Procurement Scheduling Inventory Control Strategy Planning Operations Planning …leading to gains in efficiency and competitive advantage! Manpower Planning Facility Utilization Service Performance Storage Location & Layout Engineering Scheduling Monitoring & Evaluation How? Instant access to information!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 57 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 Marketing Finance & Control Human Resource (Total Enterprise Interconnectivity) CEO Monitors Company Performance Via “E” Portal Interoperability Return Back 2

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 60 The Technology Adoption Life Cycle (TALC) Answers Key Questions: What technology should I buy; When should I buy it?

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 61 Technical Enthusiasts Visionaries Pragmatists (Business Users) ConservativesSkeptics 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 ROI Low Risk & High ROI The Technology Adoption Life Cycle (TALC)

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 62 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’?

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 63 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 Format, translation, syntax, encoding & compression protocols Protocols that allow application processes to communicate The “E” System = Forward Web Age Solutions Equant Klee Group Ortems SSA GT

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 64 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.

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 65 E-BMC Mission is to … Ensure client business viability by the knowledge transfer and e-business enablement service essential to remaining strong and competitive!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 66 The Goal: E-BMC partnering with CEOs and IT Professionals to achieve the benefits that can come from e-business enablement!

www.e-businessmanagement.com 2004 © E-BMC/Dr. John T. Whiting All Rights Reserved Slide 68 Dr. John T. Whiting, Director E-Business Enablement Services 973-764-0375 john.whiting@e-businessmanagement.com http://www.e-businessmanagement.com E-BMC Contact

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

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

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