IT departments fall victim to their own success

Responsibility for the internet will be taken from the `high priests' and spread throughout businesses, says Stephen Pritchard

Managers are not equipped to deal with the internet economy, and IT departments are most in need of change, according to research carried out by Benchmark, a consultancy, for Netscape and Sun Microsystems.

Benchmark surveyed 300 directors of leading companies in the UK, contacting heads of marketing, finance and IT. They found that two-thirds of all directors feared that failing to come to terms with the internet would damage their business; the same number also felt they lacked the skills they would need to exploit the net economy. And 75 per cent felt that making use of the internet would benefit their firms. More worryingly, half of IT managers believe their firms are already not doing enough to prepare for the impact of the net.

Companies need to change the way they operate if they are to make the most of the net, Sun and Netscape believe. Managers at all levels, and in all businesses, will have to learn to deal with e-commerce on a day- to-day basis. It will no longer be sufficient to leave it to the "high priests" of the IT department. Companies that fail to adapt run a real risk of falling behind, or failing altogether, suggests Guy Norgrove, director of the Sun-Netscape Alliance in Europe. "Managers need to know how technology can be used to drive the business. The marketing department will have to improve its grasp of technology in order to make the relevant strides."

The report cites well-known examples of internet-based companies, such as the book seller Amazon and stock broker E-Trade, which have come from nowhere to wreak havoc on sleepy business backwaters. "The business world is on the brink of an evolution that will have an impact on our lives on a par with the Industrial Revolution 200 years ago," the report says. "The net economy enables any company to reinvent itself, prosper and survive."

But the internet is not just about selling. For every company that can make a success of selling directly to the public over the net, there will be several more that can make significant efficiencies or improve customer service by using the internet. Firms such as AXA Sun Life, which uses the net to communicate with financial advisers, and Ford are good examples. By using the net, Ford has reduced the time to ship new cars from 50 to 15 days.

Marketing managers have perhaps the most pressing need to learn about the internet. Over half the marketing directors surveyed by Benchmark believed that the net had already changed their jobs; 29 per cent believed that they should control their companies' internet strategies.

Supply, purchasing and even personnel departments will need to adapt to using the net, the report suggests. Companies that do so will become more efficient, cut costs and be more flexible. The traditional lines between departments and job functions will give way to "hybrid directors and managers who bring their skills in technology, sales, marketing and customer service", Sun and Netscape predict.

Nor is the IT department itself immune to change. IT specialists have led the development of the internet within firms but the report predicts that the IT department, as it now is, will be increasingly anachronistic. Instead of one central computing department, IT and internet expertise will be distributed across the company.

As a result, the chief executive or managing director will have to understand the internet and key IT issues. "The IT department as we know it will disappear altogether. The internet will mean that IT will play a central role across the organisation," researchers found.

Details of the report, `The net economy, survive or thrive?' can be found on the internet at www.netscape.com or email neteconomy@netscape.com