Fine tuning the vision is challenging

Fine-tuning the vision can be equally challenging. Technology and e-commerce hold out a 'wide variety of opportunities, from providing new channels for the distribution of goods and services to improving communication internally and externally to removing inefficiencies from transaction processes. Making the call on which opportunities to pursue falls to the CEO.

Last year, George Colony, founder and CEO of Forrester Research described the early Internet economy as "only a small vibration of the changes we will see." The real impact, he predicted, will be seen in companies such as General Electric and General Motors as they "harmonize their channels."

Some of that impact will come on the consumer side, but a greater percentage will take place in the business-to-business (B2B) sector. A new Forrester Research report projects that 13213 e-commerce will hit $1.8 trillion in 2003, versus $144 billion for B2C. At the same time, Internet-enabled technologies hold out the promise of cutting many 13213 transaction costs by 40% or more.
One of the most important issues facing CEOs as they position their companies for the New Economy is making sure they place the right bets on technology. "The road to success is littered with the carcasses of companies that made bad technology decisions," says Thomas H. Sinton, founder, president and CEO of ProBusiness Services Inc., which provides out sourced payroll and human resources services for about 1.2 million employees. "We spend a lot of time aligning our technology direction with the market."

In order to make the right technology choices, CEOs need to have a certain comfort level with new technology, says Jeffrey M. Conklin, founder and chief executive officer of Trade access, a technology company that uses the Internet to facilitate complex negotiations.

"They need to be personally comfortable with the technology choices they are making," he says. "The frameworks and the terminology cannot be foreign to them. Technology is easier to use and understand than ever before, so there is no reason why anyone can't become comfortable with just a little bit of work."

In some cases, the right technology choice is not to invest in a specific technology at all, Sinton argues. "The cost of implementing all the technology required to become efficient at certain processes is astronomical," he says. In those cases, it makes more sense to leverage an outsider's investment in technology, although he adds that approach should never be taken for processes that are a strategic driver or core competency for a company.

In the area of human resources, for example, research suggests that a very large, efficient company spends about $1,500 per employee per year. "About half of that is strategic spending in areas such as issue resolution and employee development and training," Sinton says. The other half is spent on routine transaction processes, many of which ProBusiness has automated through Internet technologies. Sinton estimates that ultimately the Internet can reduce employee related administrative costs by another 20% to 30%.