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New information technologies bring new business challenges: threats from new competitors and opportunities to change focus and practices. The business impact of new technology usually receives the most attention —appropriately — but managers shouldn’t overlook the rippling effects on the company’s IT function. IT departments not only must respond to the newly perceived business needs, but, as technologies change, they must adapt their procedures and practices. In the 1990s, for example, companies had to cope with new business drivers (such as business-process reengineering and globalization) while addressing new technologies and techniques (such as client-server computing and IT outsourcing). That forced the IT function to adopt new agendas and practices and to reassess its core purpose and capabilities.1
As companies exploit the Internet, another such transformation is appearing. E-business gurus suggest two key goals for the e-commerce era. The first is a robust and comprehensive IT infrastructure. If the business is online, the technology must be reliable and scalable. The second is the ability to rapidly develop and implement new e-business applications.2 Companies not only must seek early-mover advantages in e-commerce, but also must speed up their capabilities in product innovation and imitation. How can they do that using traditional models of the IT function?
To answer that question, we surveyed 24 companies whose IT departments were engaged solely in e-commerce activities — both dot-coms and incumbent brick-and-mortar companies. We wanted to know how people at the companies perceived e-commerce challenges and whether they were implementing new practices to meet them. We adopted a unit of analysis we called “e-IT,” a term that represents the activities of the IT teams we surveyed.
Our results show that, regardless of company type, the character of the IT function is different in e-commerce, where a variety of new practices and procedures is evolving.
We asked those surveyed — including senior IT and business executives and IT personnel — to describe IT practice vis à vis e-commerce, to highlight any significant differences in the purpose and spirit of the IT function, and to describe the experience of responding to e-commerce demands. We compared respondents’ views to the traditional model of the IT function and identified seven shifts in perception of IT in the e-commerce context. (See “How Companies Believe E-Commerce Is Changing IT.&
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1. J.F. Rockart, M.J. Earl and J.W. Ross, “Eight Imperatives for the New IT Organization,” Sloan Management Review 38 (fall 1996): 43–55;
J. Cross, M.J. Earl and J.L. Sampler, “Transformation of the IT Function at British Petroleum,” MIS Quarterly 21 (December 1997): 401–423; and
D.F. Feeny and L.P. Willcocks, “Core IS Capabilities for Exploiting Information Technology,” Sloan Management Review 39 (spring 1998): 9–21.
2. A. Hartman and J. Sifonis, “Net Ready: Strategies for Success in the New Economy” (New York: McGraw-Hill, 2000); and D. Tapscott, “The Digital Economy: Promise and Peril in the Age of Networked Intelligence” (New York: McGraw-Hill, 1996).
3. M. Bensaou and M.J. Earl, “The Right Mind-set for Managing Information Technology,” Harvard Business Review 76 (September–October 1998): 119–128.
4. A. MacCormack, “Product-Development Practices That Work: How Internet Companies Build Software,” MIT Sloan Management Review 42 (winter 2001): 75–84.
5. M.J. Earl, “Management Strategies for Information Technology” (London: Prentice Hall, 1989), 113–115.