You’ve been asked to transform the way your company operates using new and fast-changing technology. Your more sceptical colleagues are waiting for you to fall flat on your face. And once your strategy is in place, you’re praying it will deliver the big cost and efficiency benefits the chief executive promised shareholders in the last annual report.
Welcome to the brave new world of the e-business pioneers – the men and women charged with kick-starting the online business-to-business revolution.
The Engineer contacted some of the leading engineering, manufacturing and technology companies based or operating in the UK to find out who is driving their e-business strategy.
Some of the e-pioneers are working at group and global level, others are piloting highly focused initiatives within individual companies. All are breaking new ground.
Clearly, 2000 is the year industry is getting serious about doing business online. Most e-business leaders have only been in the job, or had it formally added to their remit, since January.
This does not mean that companies have only just woken up to the potential benefits of e-procurement, supply chain management, web-based collaboration and the range of other benefits they hope their e-business strategy will deliver. From the safe vantage point of summer 2000, it is easy to forget that just nine months ago, industry was awash with hype – but not about e-business.
`A lot of organisations had a thing called the millennium bug on their minds in 1999, which tended to get in the way of doing real business,’ explains Richard Scarre, e-business projects director at Glynwed, the international engineering group.
`I think most people were trying not to stick anything fundamentally challenging into their IT mix in the last quarter of 1999.’
Scarre says Glynwed developed its plans during 1999 and is now ready to move. Like all his counterparts, he starts from the position that e-business is far more than an IT issue. `It’s not a technical issue, it’s a business issue,’ he says. `Of course there are technical decisions to be made, but in many cases the B2B aspect will affect the whole organisation in a far more fundamental way than which piece of IT kit we buy.’
The variety of backgrounds of the sample group clearly demonstrates that e-business is seen as far too important to be the sole responsibility of the IT department. A much-used phrase is `whole business change’ because, if e-business achieves its potential, all parts of an organisation will be affected.
Bearing this in mind, most e-business leaders have wide-ranging experience of different disciplines – though an encouragingly high number are trained engineers.
Our pioneers also enjoy plenty of backing from the top. If they aren’t on the board themselves, they report to senior directors who are only too aware of the importance of putting a successful strategy in place.
This is crucial, according to Kevin Gamble, executive director responsible for e-business at Weir Group. `I’m making sure the managing directors of our companies understand that it’s not their IT departments who are leading this – it’s them,’ says Gamble. `With something this important, there is no substitute for leading from the top.’
Asked to name the biggest challenge, the responses were revealingly similar. Getting colleagues, trading partners and customers to believe in e-business came up time and again.
Privately, several e-business leaders said the prominence often given to cost savings in public pronouncements about e-business does not help their cause, simply fostering fears in some colleagues that the internet is a fast track to redundancy.
Rather than just talk about saving money, they would prefer to highlight the positive benefits e-business can bring in terms of reaching new markets, and the opportunity for employees to improve their efficiency and broaden their skills.
One e-business leader says: `I’m not underestimating for a minute the amount of political obstacles we face. There is going to be resistance. Even people who are normally very receptive to new technology in the context of core business are much less so when it comes to anything to do with the internet.
`I’m having to go through a process of re-educating people, and that will take time.’
Another says: `Some people find it hard to believe we will achieve what we say we will in such a short time-frame. Getting them used to the speed of the whole thing is often the hard part.’
Some companies are rising to the challenge of creating an internet culture in highly innovative ways. For example, ABB is rolling out cyber-cafes to all its sites, which will eventually give every employee internet access.
If persuading colleagues of the merits of e-business is one challenge, getting customers to believe the same is arguably a much bigger one.
But Rick Whitmyre, vice-president for communications and e-commerce for Invensys Intelligent Automation, believes changing customer behaviour and persuading them to buy online is key. `Customers must see the benefits of an online relationship before they will give up on traditional purchasing methods,’ he says.
Picking the right partners
Another challenge for the e-business leader is identifying which technology partners to work with. Large, global engineering companies like ABB are working at group level with the likes of IBM and Microsoft. `These are big players in the overall structure, and we can work with them to develop the solutions our business needs,’ says Mike Hobdell, ABB’s UK information services manager.
`If individual businesses were left to look at those issues, I can imagine they might be swamped by the hundreds of different suppliers in the market.’
Renishaw group marketing services manager Marc Saunders agrees that the clamour of suppliers out to grab a piece of your e-business action could easily become overwhelming. `You have to make a decision and start somewhere. You can’t afford to become paralysed by the amount of options available, because nothing would get done.’
But for all the challenges they face, all the people we spoke to are convinced the work they are beginning will have a profound impact on the future of their organisations.
Ric Francis, recently appointed group chief information officer for TI Group, provided perhaps the neatest summary of the potential benefits e-business could deliver, if he and his colleagues get it right.
`Yes, there are costs to be saved, but that’s not the main issue,’ says Francis. `We are engineers, and the new technology gives us the chance to make our expertise available to a wider audience. That isn’t about short-term cost savings, it’s about securing our future.’
Mike Hobdell, UK information services manager, ABB
A mechanical engineer with training in IT applications, Hobdell’s remit is to bridge the divide between `techies’ and engineers and source e-business solutions.
`E-commerce is central to the future strategy of ABB,’ says Hobdell. Although he doesn’t underestimate the significant technical challenges he faces, he believes changing established ways of thinking is the key.
`The biggest challenge ABB faces is getting the business culture to adapt to the changes of the next few years.’
John Leggate, group vice-president for digital business, BP Amoco
The petrochemical giant has drawn its e-business, IT and telecoms operations together under the umbrella of `group digital business’, led by Leggate since its formation in December 1999. Leggate is a member of BP Amoco’s top leadership team and reports directly to group chief executive Sir John Browne. His remit is to encourage every business stream to optimise its use of digital technologies.
Since January, BP Amoco has been involved in the launch of a number of electronic marketplaces, and joined 13 other energy and petrochemical companies to announce the launch of an industry-wide e-procurement exchange. Leggate is a chartered engineer who has worked for BP since 1979.
Ray Sharpe, chief executive, Cookson Electronics Division
Cookson has made a strong commitment to e-business, which it sees as offering key competitive advantages for those businesses which get their strategy right. Under Sharpe, the Electronics Division has set up an employee intranet that will become the background for a customer relations management system and is implementing e-procurement.
`The objective is to make us easier to do business with,’ says Sharpe. `I know that e-business can do that, and it is a full-time commitment for us.’ But he adds: `Whether it will bring additional revenues I haven’t a clue at this stage and nor, I suspect, does anyone else.’
Rick Radecki, corporate director, e-business, Delphi Automotive Systems
Radecki’s first brush with the internet came in 1995 when a member of the marketing development team asked for $1m to develop Delphi’s online presence. He told her: `The internet? You must be kidding. I know what will happen – we’ll end up with a thousand requests for 1974 Chevette radiators.’
Since January, however, Radecki has led Delphi’s global e-business programme with a remit to further develop online initiatives that already delivered savings of $60m last year.
An industrial engineering graduate, Radecki has worked all over Delphi in his 30-year career. His team aims to apply e-business to customer relations, the after-market, supply chain management, e-procurement, engineering and communications.
As it invests further millions in the internet, Delphi has yet to receive a single request for a Chevette radiator.
John Keeble, head of knowledge management, Enterprise Oil
According to Keeble: `We’ll stop talking about e-business in about a year’s time – it will just be the way you do it.’ The technical aspect of making e-business work is not the biggest task ahead. `The cultural change is the biggest one. Setting up systems is a matter of time and resources, but the major challenge is getting people’s heads around what e-business means.’
Keeble believes that the high level of collaboration which already exists in the oil industry, particularly out in the oilfields, will accelerate as web-based initiatives proliferate.
Andy Eggleston, vice-president for consumer marketing, Ford of Europe
Working together with the purchasing division Eggleston leads Ford Europe’s involvement in Covisint, the online B2B exchange the car giant is developing with rivals General Motors, DaimlerChrysler and Renault-Nissan. His wide remit also includes Ford’s extensive business-to-consumer activity.
The company is well-versed in using the internet to communicate with its supply chain. Its Ford Supplier Network has 28,000 users at 2,300 suppliers, with access to a website containing key data on development, quality and payment.
Phil Dawson, e-business, director, GKN
Dawson, GKN’s first e-business director, has been in place since March. He leads a team charged with implementing web-based processes throughout the organisation. His background is in knowledge management, and he places a heavy emphasis on listening to the people who will have to use any new systems day-to-day. `There are lots of innovative ideas coming from around the business, and within eight weeks we decide whether or not to proceed with them,’ he says. Dawson believes some of the biggest opportunities to flow from e-business will not necessarily be connected with GKN’s activities but will emerge as its strategy evolves. `We now have a clear idea what some of those opportunities might be, but we also need to understand the risks. At this stage nobody really knows how all this is going to pan out.’
Richard Scarre, e-business, projects director, Glynwed International
Scarre, another new-year appointment, is based at Glynwed’s management services company and reports to the group managing director. Glynwed’s compannies are involved in testing web-based initiatives. Glynwed Pipe Systems is testing Windchill – a suite of e-business solutions from PTC – in a bid to improve internal systems integration and communication, with a particular focus on product development. Other initiatives include online ordering for its food service and distribution businesses, and a B2C site for its AGA brand. Scarre says: `There is increasing trading between our European companies. The challenge for e-business is to make the system easier and stop all those bits of paper flying around the place.’
Glenn Frommer, director, e-business, ICI
Frommer took up his newly-created post in June with a brief to promote best practice across the ICI group, help business units develop their e-business initiatives and negotiate alliances where appropriate. He reports to chief executive Brendan O’Neill. A New Yorker, Frommer has held various positions within ICI over the last 15 years since he joined its subsidiary National Starch and Chemical as a chemical engineer. He arrived at the London head office in early 1999 as part of the ICI group performance improvement team.
Mark Stevens, sector marketing director, IMI Norgren
Norgren’s e-business strategy took a major leap forward in April with the launch of the Norgren Webstore, which it claims to be the pneumatic industry’s first online sales site.
Stevens, who has a marketing and commercial background in Norgren and other IMI companies, says cost savings are secondary to the company’s main focus – using e-business to build closer relationships between customers and partners. `The biggest single challenge is integrating e-business into our existing systems. It’s a particularly big issue for Norgren, because we have grown by acquisition and have a variety of legacy systems around the world.’
Rick Whitmyre, vice-president, communications and e-commerce, Invensys Intelligent Automation
Whitmyre, based in the US at Invensys’ automation solutions provider Foxboro, is leading the drive to deploy e-business throughout the group, enabling it to deal with suppliers, internal processes and customers more efficiently. His background is in corporate communications and marketing. Initiatives in place include direct internet ordering by purchasing teams and MeasurementExpress.com, which enables process instrumentation to be built and delivered within 24 hours of an order being placed. A technical support extranet also delivers diagnostic and maintenance services to customers’ automation systems.
Martin Sharrocks, managing director, Jet-Spares.com, Hampson Industries
Sharrocks conceived and developed Jet-Spares.com as a way of meeting demand for aircraft engineering and gas turbine components no longer available from OEMs. These components – sometimes known as `aliens’ – can leave owners facing the equivalent of looking for a needle in a haystack. Jet-Spares will source the manufacture or supply of the spares. Sharrocks comes from a distinguished engineering background and has spent most of his working life in gas turbine component manufacturing. Last year he was elected a Fellow of the Royal Aeronautical Society.
Richard Petrie, coordinating e-business for the chief executive’s task force, Kvaerner Group
Petrie is conducting a group-wide audit of e-business and its relevance to the different companies within Kvaerner, many of which are already implementing their own e-commerce initiatives. The engineering, construction and energy group identifies procurement as the most obvious area where e-business will have a major impact. `But it has the potential to be a fundamental part of the business as the networked economy takes off,’ says Petrie. `A major issue for us is to develop a strategy which is flexible enough to cope with change.’
David Donnelly, joint managing director, Mayflower Corporation
Mayflower is a classic example of a company with big plans to introduce e-business in order to enhance its existing business and develop new markets.
Donnelly, who has overall control of e-business strategy, says Mayflower wants to use the internet to sell more parts for the vehicles sold by its bus division. It is developing a web-based catalogue allowing customers to view components online, check their price and place an order.
This system will reduce costs for both parties by eliminating phone calls and unnecessary paperwork. Crucially, it will give Mayflower access to anywhere in the world where its vehicles are sold – as long as the customer has access to the internet.
`We know at the moment we only have a small share of the parts market, which means our customers are buying their spares elsewhere,’ says Donnelly.
`By placing our spares business online, suddenly there are no boundaries. We will also know what they are buying, and what they are not.’
The £1m project is due to go live in January, and Donnelly says Mayflower hopes to extend the system to include parts for other vehicles manufactured by the company, such as fire engines.
There are several other e-business initiatives around the Mayflower group, but Donnelly is careful to keep things in perspective. `It has a lot of potential, but it’s not going to transform our business overnight. The speed at which e-commerce advances will to a large extent be decided by our customers.’
Marc Saunders, group marketing services manager, Renishaw
Saunders trained as an engineer and has also worked in product management. He reports directly to the Renishaw board, and is responsible for co-ordinating the implementation of a phased e-business strategy for the automated metrology specialists. The aim is to introduce web-based processes as an additional means of interface in all departments of the business. However, Saunders says the company is wary of turning the business upside down. `We’re not looking to do it all in one go, because we want to make sure we get it right.’ The company is developing an electronic product catalogue, and later phases will concentrate on issues such as customer data, field sales and after sales customer support.
Andrew Freeman, marketing manager, Renold Chain.
Renold sees its new website as a highly efficient way of communicating with customers, and potentially of sharing useful information. An early example is Renold Chain’s Online Chain Selector, giving users access to intelligent software which can determine the correct size of transmission chain. `This is definitely the sort of thing we’ll do more of,’ says Freeman, who believes that the ability of a web site to get customers returning time after time offers major marketing benefits.
Tim Morrison, executive vice-president, Shell Internet Works
Morrison came to Shell’s e-business operation from a financial background – he formerly ran Shell Finance Services – and now has the task of pioneering web-based initiatives across the company. Shell has more than 100 projects under way and at various stages of development. Many are B2B, and focus on creating efficiencies in procurement or trading, such as IntercontinentalExchange in which Shell is a partner. Morrison says: `At Shell, we believe that e-business is the business, and more companies will come to realise that it’s not something to be done in isolation.’ Morrison adds: `The disciplines of e-business are much the same as for the old economy – you have to have good products and reasons for your customers to prefer you.’
Jayne Chace, vice-president, global marketing executive office for information and communications, Siemens AG
Chace, whose background is in IT, says e-business is the top priority for Siemens.`We are currently undergoing the transformation from Siemens into e-Siemens,’ she says. The electronics giant aims eventually to operate from one, unified e-business platform which will encompass suppliers, customers and employees. A major step towards this is Siemens Mall, an electronic marketplace for Siemens companies to conduct B2B e-commerce. The website sends product order data to the relevant company’s materials management system, and allows purchasers to track its progress.
Ric Francis, chief information officer, TI Group
The global specialist engineering group recruited Francis as its first CIO in May to drive its world-wide e-business development programme. Formerly IT director for Pepsi Cola International, he is a member of the group’s executive board and reports to chief executive Bill Laule.
Francis believes speed of response to a rapidly changing business environment is one of the keys to a successful e-business strategy. `It’s going to move so fast that you can’t afford to embark on a two-year programme, because by then the world has changed,’ he says.
Priscilla Guthrie, vice-president for e-business, TRW.
Appointed to this newly-created post in February, Guthrie has global responsibility for TRW’s e-business strategy, reporting directly to president and chief operating officer David Cote.
Based in the US, her initial focus will be on developing e-business initiatives for TRW’s automotive business and coordinating them with those under-way by its customers.
Her 25-year career with the components and technology supplier includes three years as deputy general manager of its information services division until 1998. An electrical engineering graduate, she also holds an MBA.
Rudy Markham, strategy and technology director, Unilever
The Anglo-Dutch food giant will spend £130m on e-business initiatives this year and has embarked on a two year project to install a global e-procurement system which it expects to produce savings of £1bn by the end of 2002. When the process is complete, every Unilever employee buying items from office supplies to pumps and motors will be able to select from a catalogue of previously agreed sources at volume-negotiated pricing.
Frank Nigriello, director of corporate affairs, Unipart
Earlier this year, the parts and logistics group declared its intention to become a `fully e-enabled business’. Nigriello, who has the job of preaching the e-business gospel within Unipart’s various businesses and externally said: `This is really a natural evolution for Unipart, because we’ve been working on e-business for about five years and using the latest technology to improve the business for decades.’ Central to Unipart’s plans is the creation of Ufulfil.com, a centre of excellence within Unipart designed to address the online needs of customers. It is expected to be operational later this year. Branches acquired through the purchase of Partco are also being equipped with web-based systems to enhance ordering and marketing.
Kevin Gamble, executive director, The Weir Group
Gamble aims to champion e-business from the top. As well as improved supply chain efficiencies, he sees huge potential for delivering bespoke solutions by incorporating the latest design technology online. `We aren’t there yet, but there is a lot of effort going into making the concept a reality,’ says Gamble.
`Eventually, I would fully expect a customer to come into our web site, select our virtual product and incorporate it into their own virtual design. The potential gains are phenomenal.’
For a global group such as Weir, Gamble also expects internal communication benefits, some of which are already arriving following the launch of its own intranet. `Historically, paper-based communication has been pretty inefficient. As a way of sharing information, the internet is without question an incredible tool.’