Gartner Group Predicts the Headlines

SAN DIEGO (04/11/2000) - At the second Mastermind Keynote Panel of its Spring Symposium/ITxpo 2000 conference here today, Gartner Group Inc. analysts gazed into their crystal balls to predict the headlines for April 11, 2001, with a focus on e-business.

The theme of the panel was, "E-business 2001: Three Strategic Imperatives," and Gartner broke with its normal tradition of inviting outside speakers in favor of using its own expertise.

"We're going to be selfish and focus just on our own opinions," said David Whitten, senior vice president and general manager at Gartner, who introduced the speakers and explained that each of them would be focusing on a different aspect of the future of e-business.

Each speaker showed a slide containing a headline that the consultancy hopes to see in one year's time. First to speak was Jeffrey Schulman, group vice president at Gartner, whose headline read "Old economy vs. new economy debate is over: New CEOs reign." His theme was that e-business is changing the requirements for a successful chief executive officer, away from traditional backgrounds such as finance and marketing and toward technologists.

"This group is best positioned to become the new CEOs," Schulman said, indicating his audience.

To validate his point, Schulman showed how e-business is increasingly touching every aspect of companies' operations. A successful e-business strategy, he said, include both customers and suppliers -- positioning a company's technology experts at the core of its operations. However, he also cautioned that in order to be successful, e-business strategies have to be focused in the right direction, and that these same technologists will be responsible for ensuring that that is the case.

"Think about your core competences: what is unique about your enterprise, what your customers value. Then shed the rest," Schulman said.

Schulman then focused in on some of the specific metrics that Gartner believes the new generation of tech-savvy CEOs will need to consider as part of their e-business strategies. These included an analysis of how technology will impact the cost of sales; service and support costs; general and administrative costs; product creation; inventory; logistics and sourcing; and fixed assets.

Next to speak was Daryl Plummer, group vice president at Gartner, whose headline read "Greenspan cites e-business as the key reason for GDP (gross domestic product) growth without inflation," and whose talk concerned how to find new business opportunities through e-business.

Key to the success of e-business, Plummer said, is the concept that different parts of a business, whether they are separated by geography or business segment, have different requirements.

"We have to recognize that global enterprises do not really exist as such," Plummer said, because they themselves are composed of a collection of enterprises with different needs.

However, Plummer added that one of the challenges of the Internet is breaking down these boundaries.

"(E-business) is about opening things up; global class vs. enterprise class is an issue we have to deal with," he said.

Plummer then went on to say first, that these boundaries should be viewed as opportunities not problems, and second to discuss how this breakdown of barriers might be achieved. This included e-business platform standardization, and consideration of how applications could be used for customers' benefit.

"(We must) stop thinking applications are the solution, and start thinking services are the solution," Plummer said.

The last speaker was Al Lill, Gartner vice president and research director, whose headline read "Gartner releases research findings on top e-business success factors." Lill's presentation consisted of a list (in no particular order) of what Gartner considers to be the top 10 rules to follow in planning an e-business strategy.

His first rule was "Never plan further than 24 months out," which he said was a necessary rule because of the increasingly rapid changes in the e-business market, adding that "If you can't get the project done in 12 months, don't bother." Echoing the previous speaker, his next piece of advice was "Use separate strategies by industry, business unit, and geography." One of Gartner's hardest tasks, he said, is convincing its clients that a "one-size-fits-all" approach to e-business initiatives is doomed to failure.

"During your analysis, give equal weight to internal and external processes," was piece of advice number three, by which he meant that a successful e-business project should both cut internal costs and boost revenues, while "obtaining total buy-in from the board" is Gartner's advice to avoid half-hearted or incomplete implementation of projects.

The fifth piece of advice was to decide in advance which of three business models is the most appropriate: "Deliberately execute a 'buy,' 'spin-off,' or 'transform' business model," Lill said. While the "buy" option is only available for companies with the available resources, "spin-off" is viewed as best for companies using e-business to enter new markets, while "transform" should be adopted if the e-business strategy fundamentally affects a company's existing business, he said.

Lill used the experience of Toys'R'Us two years ago for piece of advice number six, which was "Play by the new rules." When the toy retailer originally launched its online presence two years ago, he said, it broke the rules of e-business by not including its full range of products on the site, and also by not offering discounts for online purchases. The launch was not a dramatic failure, teaching the toy retailer valuable lessons, Lill said.

Emphasizing the ruthlessness of the e-business market, "Terminate any weak link regardless of short-term 'pain,' " and "Enhance or destroy your (existing) distribution channels based on their true power and value" were the next two pieces of advice.

"If you don't do it, your competition will: You've got to be brutal," Lill said.

"Don't try and control everything (in your market), but do try to heavily influence it," came next, while Lill's final piece of advice, which related to an earlier recommendation, was that "Speed on ruthless execution is everything."

For one conference attendee -- an IT director at an established company which is at the implementation stage of its e-business strategy -- these pieces of advice were the most valuable part of the presentation, although he said that they also gave him cause for despondency.

"The speaker said that even following seven or eight of these rules isn't enough," said the IT director, who requested anonymity, "and where I am, we're only up to about four or five."

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