Business Forum: Meet the Real Revolutionaries - Commerce Chain Executives

By Isaac Cheifetz
Published November 11, 2002

Revolutionary technologies and massive change in the workplace have gone hand-in-hand throughout history.

The role of corporate executive, for example, is less than 150 years old, having arisen in the 19th century. Technological revolutions in transportation (railroads), communication (telegraph) and manufacturing (mass production) led to the creation and rapid growth of giant corporations. These required a new class of professional managers who were salaried employees rather than owners.

Similarly, a new class of corporate executives is evolving today, using the Internet to transform traditional business functions.

As I've discussed before in this column, the real Internet revolution is in the mundane, near-invisible corporate functions of logistics, purchasing and administration.

During the past five years, as dot-coms rose and fell, Fortune 1000 companies quietly were transforming their back-office operations using the Internet.

The gap between consumer and business adaptation of the Internet is startling. Less than 4 percent of consumer transactions will be conducted on the Internet this year, the Boston Globe reported in August. In contrast, about 25 percent of all business-to-business transactions will be made online by 2003, according to a Boston Consulting Group survey.

Consumer purchasing over the Internet is constrained by deeply ingrained habit and user experience (for example, consider book buyers' preference for browsing in a bookstore when they are not seeking a specific title).

In contrast, business-to-business e-commerce represents the migration of the work flow behind entire industries to the Internet, transforming how companies collaborate internally and externally (with suppliers, customers and partners) with astonishing speed.

But in the end, people, not machines, drive change. The key to the success of these endeavors is a new breed of business executive -- those who intertwine industry expertise and versatility in leveraging technology to effect organizational change.

Refined Roles

Here are five executive roles that stand out for having been substantially changed by e-commerce.

Some variation of each position existed previously, but often at a lower and less-strategic level in the company.

• Vice President of Supply Chain and Logistics. Companies have been using computers to monitor inventory and forecast demand for nearly 40 years. But the Internet's standardized set of technologies gives businesses vastly extended "visibility" on the supply chain.

Where a company previously might have had a director of materials management responsible for inventory management, the vice president of logistics has a more dynamic charter: leveraging e-commerce technologies to collaborate with suppliers and customers, from demand forecasting through production planning, manufacturing, order processing, distribution and transportation.

• Vice president of Strategic Sourcing. That's just purchasing with a fancy new title, you say. But more than any other corporate function, purchasing has been revolutionized by the Internet; aggregating purchasing power across divisions, eliminating inefficient paper-based approval processes and enabling improved reporting and forecasting.

For example, corporate travel agents are being supplemented or even replaced by automated travel Web sites with a firm's travel policies embedded in them.

The vice president of strategic sourcing is responsible for reengineering procurement processes that may have been in place for decades, replacing them with dynamic sourcing strategies that take advantage of the flexibility and power of e-commerce technologies.

• Vice President of Performance Management. Until recently, companies measured their success primarily by financial numbers. But the growth of "business intelligence" software and quality initiatives such as Six Sigma have created a staggering array of alternative metrics by which to judge performance. Yet, according to author Eliyahu Goldratt: "We are drowned in oceans of data: nevertheless it seems as if we seldom have sufficient information."

The vice president of performance management may be the corporate controller, or vice president of strategic planning. Whatever the formal title, this is the person responsible for driving profitability by providing consistent, immediate and integrated information.

Financial measurements still are the bottom line, but companies are building Web-based "balanced scorecards" to measure customer satisfaction, service quality and other critical factors, leveraging the data generated by e-commerce applications. The goal is to unify planning, analysis and reporting, allowing companies to improve business performance and better execute strategy.

• Chief Customer Officer. The past several years have seen the growth of "customer relationship management" (CRM) software applications such as Seibel Systems. But as always, companies are discovering that software magnifies the quality of the underlying business practices, for good or for bad.

To improve the return on investment from their CRM investments, companies are creating executive roles responsible for breaking down organizational barriers that can prevent companies from reaching the holy grail of knowing what customers want and when they want it, and satisfying those needs.

The chief customer officer (also known as vice president of customer relationship or vice president of customer strategy) tends to be a well-rounded marketing or sales executive with strong people and program-management skills.

This is a staff function, not a line function, and the ability to evangelize and influence decision makers across the organization is critical to success, as is sponsorship by senior management.

• Vice President of e-Business. The ability to embed work flow processes in e-commerce systems allows service providers to offer an array of outsourced services. These have potential to grow from niche businesses into major enterprises. Fortune 500 companies such as ADP (payroll) and EDS (computer operations) started out this way.

The vice president of e-business is responsible for developing online businesses and helping corporations move existing operations online. These hybrid general manager/process guru types actually are making money using the Internet.

Many of these executives are homegrown inside of corporations. Others are dot-com executives or management consultants who have stepped back into Fortune 1000 companies, bringing valuable experience as to what works in e-commerce and -- just as important -- what doesn't.