Russell D. Archibald
PMP, PMI Fellow

PMI-Texas Connection 2001
Sept. 14-15, 2001 Houston, Texas.
Published here March 2002.

Abstract | Challenges | Full Power | Business Strategies | Objectives
Portfolio Management | Process | Principles | Key Roles | Planning & Control
Team Working | Improvement | Integration | Internet | Conclusion

Challenges of the Internet

The advent of the Internet in recent years is posing serious challenges to industry, business and government. CEOs are recognizing the threats and opportunities of the Internet, as shown in Table 1.


Changes in type and level of competition



Impact of the Internet



Industry consolidation



Downward pressure on prices



Skill shortages


Table 1. CEOs of 506 Companies With Sales Over $5 Billion
List Their Greatest Challenges for 2001 [1]

Most executives in business and government today have had some direct experience with the Internet and the World Wide Web„but most of us still do not fully comprehend what these revolutionary developments really are and what their full impact on our world will be. Although we are learning something new every day about these unprecedented phenomena, a 1999 (prior to the dot com meltdown in 2000) survey[2] of 600 top-ranking executives found that

  • 92% said the Internet will reshape the world marketplace by 2001
  • 37% expected serious competition from start-ups
  • 16% expected competition from their own customers
  • 86% said the Internet would force significant changes in organizational structure.

The evolution envisioned by some from our traditional vertically integrated companies to the "internetworked enterprise" is shown in Figure 1-1[3]. The intermediate transitional organization form has been termed the "virtual corporation", operating through an integrated network that connects the company employees, suppliers, distributors, retailers and customers. Prior to the advent of the Internet a number of companies (including, for example, Chrysler Corporation and Hewlett-Packard) developed their own "intranets" using electronic data interchange and client/server computing technologies.[4] The Internet has now made at least some intranets obsolete and made possible the internetworked enterprise. Tapscott et al[5] define three layers in this new digital enterprise economic model, based on a multiclient research project with participation by a number of leading corporations:

Figure 1-1: Vertically integrated enterprises have given way to the virtual
Figure 1-1: Vertically integrated enterprises have given way to the virtual corporation and are now moving to the e-business community

"1. The internetworked enterprise is the basic functional unit of an industry environment. It relies on internetworked, knowledge-based systems to enhance its capacity to learn, be agile, and respond quickly to customer requirements. It collaborates and competes [emphasis added] in industry environments and e-business communities„often in several EBCs at once. It embraces digital strategies for developing products and services and for renewing relationships with customers and suppliers.

æ"2. An e-business community is a specific set of players with shared interests, who, together, seek market dominance within the industry environment. In the software industry, the leading EBCs are Wintel (led by Microsoft and Intel) and Java (led by Sun, IBM, Oracle, and Netscape). Often, a single company is a member of two or more competing EBCs; Microsoft and Intel, for better or for worse, are involved in the Java community. Meanwhile, IBM, Oracle, and Netscape are active players in the Wintel EBC. The term "coopetition" best describes these dynamics.

"3. The industry environment is the overall context in which businesses operate (for example, the software industry). An industry environment consists of multiple e-business communities, each of which is competing to dominate and control the overall environment.

"As noted earlier, it is the coordination of business practices and the deployment of knowledge as enabled by the Internet that distinguishes the new environment. In the EBC, the concept of partnership is not merely a vendor's euphemism for a conventional sales relationship; it takes on real meaning."

The underlying concept that enables the internetworked enterprise to operate effectively is the real-time, geographically unlimited collaboration that is only available economically using the Internet and the World Wide Web. Coupling the Internet with the natural collaborative capabilities of integrated project management produces a powerful approach to the Internet challenges.

Challenges Posed by the Internet

The challenges to business and government executives that are posed by these extraordinary developments should be rather obvious to the thoughtful executive. The most basic challenge is to determine in which of two situations your company, agency or organization finds itself:

Transform or Perish: For many organizations the changes brought on by the Internet and its related technologies are truly a life or death matter. Either the company or agency transforms itself to compete in this new environment, or accepts the fact that its days are numbered.

Exploit the Internet to Grow and Compete: All those for whom the Internet is not a life or death matter have the choice either to capitalize on the opportunities presented by the Internet or not. However, even those who are not today faced with the transform or perish option may well find themselves confronted with that option tomorrow. The developments in the global arena are moving so fast that it is impossible to predict which industries, companies and agencies are invulnerable to the challenges of the Internet phenomena. If an organization adopts a strategy to transform itself then of course this will perforce incorporate the second strategy to exploit the Internet to grow and prosper.

Within this context the specific challenges posed by the Internet include:

  • What must I do to transform my organization to assure that it will survive and prosper?
  • What changes can/must I introduce into my organization to participate appropriately in the new e-business communities and the "Customer Led Revolution"„within this new "truth economy"?
  • How can my company compete effectively when much of our previously proprietary intellectual property has been made available on the Internet?
  • How can we adequately protect our proprietary interests and intellectual capital and at the same time enter into strategic partnerships with companies that can easily become direct competitors?
  • How can I promote, foster and support the means to enable the broad collaboration that is necessary both within my organization and with our strategic partners?
  • What can I do to be sure that we can develop and launch our new products and services rapidly enough to compete in this high-speed environment?
  • How can/do I prioritize and manage strategies, projects within strategic programs and within my project portfolios, and activities within projects in this new environment?

For the shareholder and prospective investor, how can I differentiate my organization from all the other "dot com" companies so that our financial fortunes in the stock market do not rise and fall with the herd?

The principles of program and project management, effectively applied, provide powerful answers to these challenges, a discussed in the remainder of this paper.

Abstract  Abstract

1. Sources: Accenture (formerly Anderson Consulting).
2. Siegel, David, Futurize Your Enterprise, Wiley, NY, 1999, 4, quoting a survey by the Booz Allen & Hamilton/Economic Intelligence Unit.
3. Tapscott, Don, Alex Lowy and David Ticoll, Blueprint to the Digital Economy, McGraw-Hill, 1998, 22.
4. Ibid., 23.
5. Ibid., 23-24. An excellent in-depth discussion of the various types of EBC is given in this reference.
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