Intel: E-Business on Fast Track

Behind the rush to become 100 percent e-enabled.

Intel bases its business on producing PC processors that double in capacity every 18 months. So perhaps a logical explanation for why the company has gone after e-business so eagerly — and aggressively — is that it drafts its e-business blueprints in exactly the same way that it designs new chips.

In other words, Intels e-business people are geeks, too.

"Whats very important is they go to their suppliers and say, What do you think about what were doing? " says Geoffrey Bock, an e-commerce consultant at Patricia Seybold Group. "If the feedback is less than positive, then as good engineers, theyll go back and fix it."

Intel, for the third year in a row, occupies one of the top three spots on the Interactive 500 list. For the 12-month period ended June 30, Intel says it generated $25.9 billion in online revenue — 85 percent of its $30.4 billion in total sales for the period.

How does Intel do it? Meet its head e-business engineer, Sandra K. Morris. As vice president and director of e-business, she has put into place the elements of Intels "100 Percent E-Corporation" strategy. Morris, formerly a computer researcher at the University of Delaware, readily admits the companys engineering culture influences the way her 200-person group operates. "We try to treat our business systems like products that were trying to deliver to the corporation," Morris says.

In keeping with that mindset, Morris says Intel devotes 40 percent to 50 percent of its business systems spending to "innovations" — by which she means systems that employ new technologies, like the eXtensible Markup Language, which provides a common framework for exchanging information over the Net. Innovation of this type, she says, is one of the keys to the companys e-business success. "That gets us to the state where theres always something on the horizon," she says. "Our investment in these systems gives us competitive advantage."

Mainly, however, Morris job boils down to business management fundamentals: setting quantifiable goals, methodically implementing them and sharing responsibility for meeting those goals with the people who are actually changing the way they work.

It helps that Intel has been hammering away at building itself into an e-business since mid-1998. For each of the past three years, Morris has established one companywide e-business goal. In 1999, Intels drive was to connect to its customers over the Net; today, the company says it conducts business online with every one of its customers through more than 21,000 individual accounts. Last year, the goal was to make sure 80 percent of the amount transacted with its 1,000 direct suppliers occurred online, an objective Morris says Intel has achieved.

"As weve continued to learn what that connection really meant, we could set higher goals for ourselves," Morris says.

This year, Intel has taken on its most ambitious e-business goal to date: connecting its more than 15,000 indirect material suppliers, with a target of moving 70 percent of their transactions to Intels private e-market. That would save Intel an estimated $20 million. But its been a difficult undertaking, Morris says. The obstacle has been trying to establish a workable set of standards through RosettaNet, an Intel-led e-business standards consortium, with a much larger variety of suppliers. Intels direct suppliers provide the materials to its manufacturing facilities used to build Intel products — for example, a piece of equipment to make chips — whereas the companys indirect suppliers provide everything else Intel needs to operate, including office supplies, medical benefits and so on.

In 2002, Intel plans to concentrate on delivering e-business services to its employees. Already, all Intel employees receive their pay stubs and check their stock plans online. "We try to bring up five or six services to employees each quarter," Morris says.

By now, Intel has developed a methodology for converting business processes into e-business processes. The most important lesson — "learned many times," Morris says — is that the only way the e-business group can accomplish its aims is to have a parallel operations team in the group where the business process changes are occurring. That way, mandates for moving to the "new way" of working come from a trusted manager within that group instead of being imposed by someone from the outside.

When will Intel achieve its goal of being 100 percent e-enabled? Morris says its impossible to say for sure, though it probably wont be in the next three years. The e-business roadmap shes currently planning to follow through 2004 includes three broad objectives: quicker responses to changes in manufacturing plans; adoption of collaborative engineering and design across the supply chain; and improved indirect procurement.

"We know we can get even more efficient in a lot of areas," she says. "But it does take time."