Article by Laton McCartney

Focused on results
The damage estimates from the dot-com implosion and the ensuing economic downturn are still being tallied, but this much is already clear: The job of delivering successful e-business initiatives has become a whole lot more demanding than it was during the Internet's heyday.

Granted, Fortune 1000 and Global 2000 companies, especially in industries such as chemicals, energy, financial services, manufacturing, retail and utilities, are still pushing ahead full-bore with entire portfolios of e-business projects. And according to a survey of corporate I-managers by Interactive Week, budgets for Internet products and services will continue to rise, in some large companies by as much as 20 percent.

But the attitude in the corner office has changed. Once viewed by upper management as the silver bullet that would resolve any and all corporate shortcomings, the e-business equation has been changed by the dot-com meltdown and the associated backlash. "The recent failures in Internet dot-coms sobered up everyone a little about the payoff of e-commerce... and many of the anti-Internet dinosaurs are feeling emboldened," said Bob Otis, managing director at Atlantic Research Technologies, a worldwide executive search firm.

Put another way, today's I-managers--the business and technology executives charged with overseeing corporate Internet initiatives--are on the hot seat. I-managers are expected to deliver on the full value of business transformation.

"A lot of our clients are e-commerce executives in major corporations," said Tom Pullman, a senior analyst at Forrester Research. "Up until the fourth quarter of last year, they were given a lot of rope. Now with the downturn, traditional line managers and business unit CEOs are scrutinising e-commerce executives much more closely and holding them accountable to hard internal investment metrics."

How are I-managers handling the economic downturn? To get a picture of the challenges they're facing, Interactive Week surveyed Internet and interactive decision makers on the state of their Net initiatives, budgeting, return on investment (ROI), and top technical and business obstacles. Not surprisingly, the survey found that managing budgets and project deadlines were I-managers' top two management challenges.

"The future is going to be tough for a little while," said John H. Keast, who headed up Pacific Gas & Electric's ambitious e-business strategy and is currently executive vice president of operations and customer service at Asera, an e-business software company. "Senior management and shareholders aren't letting go of high expectations and of getting value for the customer. The challenge for anyone in a customer-facing [e-commerce] initiative is to unlock value and put together a really incredible set of processes that reflect what the customer wants to do." Forty percent of the I-managers polled were running customer-facing Web sites.

But the survey also found that I-managers are rising to the challenge. And whether they oversee sites serving customers, trading partners or employees, successful I-managers have a couple of things in common, experts say. They have a good feel for their business, are able to leverage brick-and-mortar resources, can align information technology (IT) and Internet initiatives, and can focus their efforts on results.

New formulas for success
There are examples of internet units that are doing just about everything right. Grant Freeland, vice president at The Boston Consulting Group, points to Delta Air Lines' high-flying Delta.com e-centre effort. Under e-commerce czar Vincent Caminiti, Delta.com generated US$265 million in revenue in the first quarter, and the company expects the online unit to generate $1.4 billion in revenue for the year.

But Internet departments that don't meet the new mandate are being hit with layoffs. And the independent or semi-autonomous corporate e-business development and operations units that don't match up with the corporations' overall business strategy are being integrated into the corporate fold or, in some instances, shut down. "They're taking their cuts like everyone else," Keast said.

But some cuts may be happening too hastily. The success of units like Delta.com is one reason many analysts still believe in Internet unit independence. Closing or integrating e-centres, as some organisations have done, may be an overreaction. "If an e-centre is very effective," Freeland said, "it doesn't make sense to integrate it prematurely. It can probably operate very effectively off to the side for several years," he said.

One danger of bringing e-initiatives entirely in-house: Many organisations overestimate their ability to roll these initiatives out internally, Freeland claimed. "They often get bogged down in a business-as-usual attitude. Unless you get the organisation issues right, the effort is going to fail."

To better their odds across the board, the Interactive Week survey found that companies are now placing a premium in e-business experience when they select senior managers to head Internet-based business programs. Most I-managers--two-thirds--have business management, as opposed to technical, backgrounds.

In April, Dun & Bradstreet put its business-to-business e-commerce initiatives under Senior Vice President Steve Alesio. Before joining D&B in January, Alesio was at American Express as president and general manager of American Express' Business Services Group. With his background in business development, B2B marketing and strategic planning, Alesio was brought in to position D&B as a major player in B2B commerce.