New executives

How a corporation structures its e-biz operations is not only an important consideration, it is arguably a matter of survival. That's a major reason why e-commerce executives today are moving rapidly into senior positions and attracting big salaries.
Written by Laton McCartney, Contributor

Vince Caminiti hates to lose. The Delta Air Lines senior vice president still hasn't gotten over the fact that Ford Motor beat Delta to the punch by announcing in February that it was wiring its entire work force. "By four hours we missed being the first company in the world to announce we were going to wire our employees," he says, the annoyance showing in his voice. "Ford beat us."

Caminiti's determined not to come in second again. That's why in early September Delta was the first airline to announce it was putting all its e-business activities - business-to-business (B2B), business-to-consumer (B2C) and business-to-employee (B2E) - under one senior executive, Caminiti, and creating a new business unit, e-Delta.

And that's why Caminiti was upset six weeks later when The Wall Street Journal made a big deal of the fact that United Airlines was taking the same approach, folding all its e-commerce initiatives into a new business unit under the carrier's chief financial officer, Doug Hacker. "It's old news," Caminiti says of the story. "The fundamental difference between us is that our competitor's CFO is responsible for everything I'm responsible for, but he's also the CFO; all I do is this. I don't have any other job. That's important."

Now maybe Joe Public doesn't give two figs how the airlines structure their e-biz operations, but for the airlines - and the rest of corporate America - such considerations are not only important, they're arguably a matter of survival. That's a major reason e-commerce executives are at a premium today and why they're moving rapidly into senior positions and attracting big salaries.

"Today salaries for a vice president of e-business in Fortune 500 companies range from $200,000 to $450,000, and from $100,000 to $150,000 in small companies," says Beverly Lieberman at Halbrecht Lieberman Associates in Stamford, Conn.

Those numbers may be slightly on the high side, at least in the Midwest. Bill Trau, a vice president at Christian & Timbers, a Cleveland-based recruiter, puts the salary ceiling at $300,000. The point is that good e-business managers are emerging as the new business superstars as corporate America fully integrates the Net into the mainstream of its activities.

"We've reached the point now where a company such as Procter & Gamble, which never had a B2C presence, is selling makeup to teenage girls over the Internet," Lieberman says. "e-business is everywhere."

Lieberman estimates that at least 25 percent of the Fortune 500 have senior e-business executives on their payroll, a number she projects will double within the next 18 months. A recent KPMG International global survey reflects similar numbers. "Of the 331 companies that responded, 40 percent said they already had a senior executive or an executive committee driving e-business initiatives, and more than half said they intended to dedicate more senior management to e-business," says John Machin, head of KPMG's U.K.-based Information Risk Management unit.

Broken down by industry, electronics and finance had the highest percentage of e-business managers in place - 80 percent and 70 percent respectively, according to the survey - while automotive was lowest, with 25 percent.

But who are the people filling these positions? What's their background and where do they fit into the organizational structure? What's their charter and how are they evaluated?

The answers to these questions vary markedly depending on a variety of factors: Are e-managers being hired by a dot-com or traditional corporation? Are they being brought in to work in a spin-off or at the parent company? How far has their employer progressed along the e-business developmental curve? Is the employer trying to increase market share, online sales or perhaps both?

Despite such variables, this much is clear: Typically the first wave of e-commerce execs was either marketing-savvy or had a solid technical grounding. To some extent that's still the case today. Trau, for instance, currently has two openings for e-commerce heads with information technology backgrounds and, ideally, electrical engineering degrees.

"On the technical side, clients are looking for someone with strong backgrounds in telecom, network design, architecture and the latest operating systems including Linux," Lieberman says. Often the technically inclined e-manager turns out to be an enlightened chief information officer, chief technology officer or chief X officer. Or, often this job is tucked in under the CIO, she notes.

And if it's a marketing type that being sought, corporations are targeting "people who have done it," notes Nicholas Gardiner at Gardiner International, a New York recruitment company. In these instances, the candidate needs to be very marketing-driven, have experience working with website developers and know enough about customer relationship management (CRM) systems to relate requirements to the systems people.

But, increasingly, Fortune 500 companies want their top e-business people to have a business background, perhaps with some operational experience. "You're seeing a number of companies bring in operations executives who know how to manage people," says Ron Shevlin, research director at Forrester Research.

Shevlin notes that e-GM is being run by GM operational executive Mark Hogan, and says he knows of two major pharmaceutical companies that are filling the top e-executive slots with operational people.

At the same time, the top e-executive often resides higher up the corporate ladder than first-generation e-managers. There are several reasons for this. One is that today's Fortune 500 Web budget can range in the hundreds of millions of dollars. "Their budgets are larger and on the increase," Trau notes. And bigger budgets usually mean a more elevated title.

More important, e-business now transcends the entire corporation in many instances. "E-business has become the business," Shevlin says. "It's not a functional part of the organization, but a separate business unit spanning the company. You need someone who is able to manage people."

"E-business can no longer be done as a discrete function," Gardiner says. "It cuts across every aspect of the company and consequently has to report to something like the office of the chairman so that you can cut out the territoriality and make sure you get 'buy-in' across the organization."

In other words, the senior e-executive needs boardroom backing and the management skills to get the entire corporation behind e-initiatives. He also needs the diplomatic skills to deal with the political and cultural issues that are a big part of this change.

"You basically transform the company from a product mentality to a processes mentality," Gardiner says. "That's what e-business is at the end of the day. It's about anthropology as much as it is technology."

In the future, Gardiner sees the e-commerce slot leading to a top corporate job. "My estimate is that this position will produce CEOs [chief executive officers] or at least COOs [chief operating officers] since they [e-execs] have to understand the processes and the organization probably better than anyone else in the company," he says.

But that's in the future. For now, here's a look at six different top e-managers, how they got where they are and where they're going.

When General Motors was looking for someone to head its newly formed B2C unit, e-GM, the automotive giant couldn't decide where to turn. "There was a lot of debate whether we should get an e-com professional from outside or someone from inside who has been a proven leader in environments where cultural change is required," says Hogan.

It was Hogan, now a GM group vice president and head of e-GM, who ended up with the job. Having led GM's Brazilian operations through a number of economic and social changes and headed the effort to reinvent manufacturing with GM's small car group, Hogan had an abundance of operational experience but admittedly was a babe in the woods regarding the technical aspects of e-business.

The result was a baptism by fire, or in this case, water. "I was getting immersed with a fire hose, in terms of what our e-business initiatives and opportunities were," he admits. A quick study, Hogan soon got up to speed with the help of an adviser Compaq Computer has assigned to the e-GM account and extensive briefings from other vendors, including Microsoft, Oracle and Sun Microsystems. "They were kind enough to give me a pretty good grounding," Hogan explains.

As the head honcho at e-GM, Hogan's charter is to connect with the company's 120 million customers around the globe on a regular basis. "Today our contact with them is episodic, meaning every three to five years, when a customer buys or leases a new vehicle," he explains. "We need to have a much more proactive, ongoing relationship through our B2C interface."

Hogan, who has 150 people under him - 50 of whom report on a dotted-line basis to various international business heads - is using e-GM to sell more than Chevrolets and Buicks. "We're not just featuring vehicles, but a broad array of services, and other components, like our vast parts operation."

Bringing all of GM's products under one e-commerce umbrella involves a global CRM effort that centers on tying together 15 disparate databases. "This will allow us to communicate more effectively and cross sell," Hogan says.

Through alliances with the likes of America Online and Net Zero and its own shopping portal, GM BuyPower, GM is attempting to expand its customer base by reaching out to virtual communities such as ICAN, a leading Internet group for the disabled, or Club Mom, a site for young families. "These communities have special needs and requirements, and we want to be able to tailor a marketing plan specifically for them. That way we can be much more precise with our $2 billion ad budget."

How is Hogan himself being evaluated in this post? "One measure is increased sales by new customers," he says. "It's not sufficient just to sell to the current customer base."

Hogan apparently is off to a fast start. He reports that in recent months, GM BuyPower traffic is up 2,000 percent.

Anyone who doubts that e-commerce executives are moving rapidly up the corporate food chain need only spend a few minutes with Clyde Ostler, group executive vice president, Internet Services, at Wells Fargo & Co.

"We really thought it was necessary to accelerate the growth of the Internet channel by giving it some very weighty attention," Ostler says of the bank's decision to put him in charge of its e-initiatives. "This extends not just to me, but most of my reports were broken out of very senior, very traditional jobs and told to concentrate exclusively on making the Internet channels for the bank's products and services successful."

Ostler, who previously served as the bank's group executive vice president of investments and has three executive vice presidents under him, reports directly to Wells Fargo's President and CEO Richard Kovacevich. He also is a member of the bank's executive committee.

Simply put, his charter is to replicate all of the bank's diverse offerings on the Web. "We're adapting all the bank's products and services to the Internet channel in a way that's easy to use," he explains. "At the same time, we're taking advantage of some of the unique things you can do on the Internet."

For his group's efforts to be successful, Ostler and his staff need to collaborate closely with the huge bank's other officers whose fiefdoms are broken down by either business or geography. "The most important thing about running the Internet Services group is partnerships to get things done," he says. "One thing that's crucial is how well we form and manage partnerships.

Ostler's senior people report on a dotted-line basis to the heads of the business units they support and directly to Ostler. "We think our strategies need to be jointly developed and owned, so we want the traditional business manager at the table, along with Internet specialists, and we want them to be equals."

Ostler views himself as joined at the hip with the bank's CIO, Webb Edwards. "We talk two or three times a month," he says. "We're very focused on how our clients interface with browser-based public Internet tools and technology, what shows up on the screen and how the network is set up. The middle and back end falls to the IT group."

Under Ostler, the bank is also teaming up with outside sources of dot-com expertise to help Wells Fargo push along some new e-commerce initiatives. Among them: B2B exchanges, a wireless technology pilot program, e-CRM, and what Ostler calls the next generation of e-banking technology, which would allow for collaborative screens and enable customers to deal with the bank interactively. "Of all the initiatives on the horizon, the interactive efforts are the most important," he says.

Clearly, Ostler loves his work. "We can get a lot done and move very fast at the same time," he says. "It's a very exciting time and place to work."

After six years at Dell Computer, Terry Klein was recently made vice president in charge of Dell's B2B initiatives — what Dell calls its Relationship Segment. "All the work I've done at Dell was tied around our enterprise partner line servers and storage," says Klein, who joined the company in 1995 as vice president of Advanced Systems Group.

All you need to know about Klein's track record in the enterprise server market is that four years after his group launched its initial server offering, Dell's server business is generating $4 billion in revenue. "We're also now the No. 2 supplier of Intel servers, both domestically and worldwide," Klein says.

Of his new role, Klein says, "It's pretty complementary to what I was doing. Each of the e-business teams acts as support organizations to the business units themselves."

Klein is in charge of both the corporate e-business team and an online e-business group that's responsible for development and support of Relationship's online tools, including Premier Dell.com, as well as B2B integration with Relationship customers.

"The online team is doing strategy work looking at how Dell can expand its corporate business in areas such as supply chain and CRM," Klein says. "These are a natural extension of our existing e-solutions. We need to have a set of offerings and be highly competitive in this area."

This is a market that Klein sees as growing at 10 times faster than traditional infrastructure sales. The key to it, Klein believes, is Dell's existing integration efforts with corporate customers. Dell has already built some 50,000 customized extranet sites for business customers. Klein is hoping to leverage these to expand sales and penetration rate within customer sites.

"The extranets are a great retention and development tool," he explains. "They [make us accessible] to every user in the customer account because we have a unified way for them to interact with us."

For both Dell and its customers, it's a win-win situation, Klein believes. "They control their side; we control ours, and as a result, we're able to marry the best of both to facilitate this total electronic relationship."

Last year, when Nordstrom was looking for someone to develop and oversee the online operations of its spin-off Nordstrom.com, the Seattle-based retailer wanted an executive experienced in the dot-com world but who also knew his or her way around a traditional corporate structure.

That's one reason Paul Onnen became Nordstrom.com's chief technology officer. "I've been with four Internet start-ups but also with Intel and AT&T, where I had 12 levels of management over me," says Onnen, who manages the spin-off's information technology (IT) shop as well as its Web operations. "I know how both worlds work."

With more than 14 years of software development and a master's degree in computer science, Onnen is one of those e-com executives with a solid technical pedigree. Yet one of biggest initial challenges at Nordstrom.com was in launching an ambitious ancillary business, Nordstromshoes.com — what the retailer claims is now the world's largest shoe store. The online store sells 30 million pairs of shoes annually.

"We had to be able to connect our Web site with 60 different shoe manufacturers, so they could ship shoes directly to our customers," Onnen says. "We manage all inventory for all these manufacturers and provide third-party fulfillment for those that can't drop ship themselves."

Reporting directly to Nordstrom.com CEO Dan Nordstrom, Onnen oversees several other initiatives, including merging different databases so customers can use the Web to order inventory directly from any one of Nordstrom's 100 stores around the country. "That way, they can order from the store and have their order wrapped and ready to go when they arrive."

In his role as a dot-com IT chief, Onnen works closely with his corporate counterpart in supporting and updating legacy systems and integrating the old with the new. But ultimately, his report card will be "on how our Web site is perceived in public. The customer experience is really what counts most."

For Caminiti at Delta Air Lines, less really is more. Several months ago, when he was still senior vice president of sales and distribution at Delta, Caminiti oversaw a far-reaching corporate fiefdom that included everything from reservations to sales. "I had 10,000 people and a lot of organization," he says. "At this point, I have maybe 40 employees."

Caminiti, who had 20 years with American Airlines and six with Delta, gave up his old job to take Delta's Internet efforts to a higher altitude. "I'd been involved with some of our early e-business initiatives, such as our 1998 agreement with Priceline.com, so it was natural for me to take this on," he says.

Caminiti now has the airline's entire e-business operation in his purview. "We believe we're the only airline structured with a senior officer at the helm, orchestrating all the B2B, B2C and B2E under one umbrella," he asserts.

Essentially, Caminiti, who reports to the CFO and works closely with Delta's CIO, has set up an e-business start-up within Delta's corporate bosom. "What's exciting is that I have the total buy-in of Leo [Leo F. Mullin, Delta's chairman and CEO] and the executive council," he says. "The buy-in says I can operate like a dot-com company, but within Delta."

As part of his charter, Caminiti's group has its own capital funding allotment, so that he could invest in outside opportunities without competing with internal units. "My role is to engage in delivering value to core Delta while seeking opportunities in the new economy."

Caminiti is incubating and creating new businesses with investments in companies such as E-Travel, which complement Delta's distribution efforts. "We have a piece of the company," he explains. "It provides software for companies to interface directly with suppliers. It allows our customers to tie directly into Delta and consequently helps us cut distribution costs."

He is also attempting to redefine relationships with customers through new channels such as My Own Company.com, which is directed at small businesses. "Instead of us saying, 'Here's how you deal with Delta,' in terms of interfacing and interacting with the customer, we're saying, 'Hey, customers, how do you want to deal with us?' We have a channel for every customer segment and if not, we'll start one. That's our fundamental mantra," Caminiti says.

On the B2E side, Caminiti is charged with strengthening relationships with the Delta work force. His group is using the Net as a means of providing employees with everything from e-learning to wellness programs, Caminiti says. Meanwhile he's moving his group into its own space.

"Our offices are going to be like a dot-com facility, with open areas, connoting that we in fact operate differently. That's an important message both inside and outside the company."

Laton McCartney is the editor for special projects at Sm@rt Partner Magazine and a frequent contributor to this publication

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