One Small Step for an IT Manager, One Giant Leap for the Economy

• 11/22/2000

Small adjustments in your operations -- taking incremental stepsinto CRM or supply chain management, for example -- can positively impact yourcompany's bottom line, said Ken McGee, GartnerGroup group vice president andresearch fellow, at the firm's October Symposium/ITxpo here. McGee calculatedthat a CRM or e-market strategy can increase revenue by half a percent, whilean ERP-type implementation could cut costs by a similar amount. Such seeminglyminor tweaks can dramatically improve a company's prospects and valuation, hesaid.

"Many companies believe that the challenges required tomaterially improve the profitability of their enterprises are so immense anddifficult to overcome that improving their enterprises is a practicalimpossibility," McGee explained. "With the power of tweaking, clientsshould see that pursuing a perfect economy through the modernization of legacybusiness processes is well within their control."

A robust business climate -- which McGee labeled "The PerfectEconomy" -- dramatically highlights IT's role in increasing corporate efficiencyand profitability. McGee’s tag plays on last summer's movie, II The PerfectStorm II, in which three storms converged into one huge storm.

In a similar, but more positive fashion, the last few years have seena convergence of economic factors -- including low interest rates, increasingproductivity, full employment, and low inflation -- that produced one of themost robust economies in recent memory.

IT managers should receive a good deal of credit for this boomingeconomy, as well as advice on how to leverage these favorable conditions, McGeesaid. Ironically, many IT managers and professionals feel they have had littleor no impact on their companies' profitability. But their role is, and willcontinue to be, far greater than they may realize. "You built [the PerfectEconomy]," McGee stressed. "IT has unleashed the power behind aphenomenal time in the history of mankind. They call the World War IIgeneration the 'greatest generation' -- they ought to call you the greatestgeneration."

The role of IT in this transformation is becoming more evident tocorporate America and Wall Street, McGee noted. "I truly believe that inthe next 10 years someone is going to win a Nobel Prize by proving that IT hasbeen the growth hormone for this Perfect Economy," McGee said. "Weare at the beginning of a monumental shift. IT is moving from the back officeto the revenue line. IT is becoming a mainstream tool for revenue growth."

Previously, IT was used to control corporate expenses. "Nowwe are witnessing the arrival of a new era where IT is being used to helpgenerate revenue as well as control expenses,” McGee explains. “Whether throughe-marketplaces or customer relationship management, IT has finally broken throughthe back-office barrier and can materially contribute to revenue growth andcost reduction. For the past few decades, IT has been largely used to improveproductivity in post-sale, back-office processes. But with the arrival of theInternet and Internet-based technologies, a radical shift is about to takeplace regarding IT investments."

A dramatic part of this shift is that more than half of dollarstargeted for IT will be spent outside the back office and outside theenterprise. "During the next five years, and for the first time inhistory, more than 50 percent of each new IT investment dollar will servebusinesses outside of the back office, especially in the most criticalrevenue-generating processes," McGee said. "During the next fiveyears, and for the first time in history, more than 50 percent of each new ITinvestment dollar will serve business processes outside of a client'senterprise, especially revenue-generating-related B2B (business-to-business)processes."

By transforming that business process to a computer-mediatednetwork, a vast amount of new opportunities, markets, and products becomeapparent." McGee added that this is good advice no matter what the stateof the economy. "Even if this was a crummy economy, I would recommend takingyour top revenue-generating, top-cost business processes, and transforming theminto e-business processes." McGee defined e-business as a business processthat transforms from its current methodology to one being performed by acomputer-mediated and controlled network.

The rewards of online, real-time connectivity throughout anorganization is giving rise to a new C-level position in organizations: chiefmonitoring officer. This new officer will have real-time access to"streaming information about the most critical processes and revenueactivity," McGee predicted.

Widespread integration and automation of reporting systems willsoon enable organizations to report earnings on a daily basis. In the nextthree to five years, at least one company will deliver its earnings per shareon a daily basis, McGee said. The transformation will be gradual. Instead ofposting corporate results on a quarterly basis, a company will do it monthly,then weekly, and finally daily. Other companies will see the advantages --essentially, more timely accurate information for investors and potentialinvestors -- and will follow.

[Infobox] ThePowers in Tomorrow's Networked Business

Enterprisesare on a clear path to a more networked business culture. That new environmentwill mean some changes in the corporate food chain. Recently, analysts at GartnerGroup developed a list of who theybelieve will evolve into the 10 most important positions within the enterprisebetween 2003 and 2010.

* Chiefmonitoring officer -- By monitoring business processes and metrics in realtime, this person will have a finger on the pulse of the enterprise. Thisperson will anticipate and solve potential problems before they develop.

* E-marketplacemanager -- This person will guide a company through the new networked economy.

* Marketingexecutives -- Will change spending targets from traditional mass outlets suchas publications, broadcast, and direct mail, to customer relationship-focusedsolutions.

* E-dealmakers -- Those who live by choosing the suppliers: The buyers for theenterprise will either thrive or die based on the effectiveness of thoserelationships.

* Customerrelationship analytic experts -- These people will look into the future to seewhat people want before they need it, and the reasons why.

* Transactioncops -- There will be a large amount of activity that will take place in thenetworked economy, especially brought about by e-marketplaces. Enterprises willneed transaction cops to make sure there is integrity in the transactions.

* Humanresources executives -- They will assure that the supply of skilled workerswill be there.

* E-businessintegrators -- Transforming legacy processes to networked economy processeswill not work unless they are integrated. These folks will be needed to makethis happen.

* Economists-- They will be needed to do a climate check of what the business environmentwill be, so enterprises will know when to take risks and when to shy away fromthem.

* Anthropologist-- This does not involve technology, but rather human beings who can do theproper diagnosis and the professionals who can do the best descriptions.

Index:
GartnerGroup Inc., Stamford, Conn., www.gartnerweb.com