Thoughts on upcoming visit

Louise,

I thoroughly enjoyed our telephone conversation several weeks ago. As
promised, I am following up with some thoughts on how we might best use the
time I have on your calendar next week. I am very much looking forward to
the visit with you and some of your team members. Joining me on the visit
will be Yoko Sugiura Selden. She works with me in my consulting business
and is also helping me with the course. She is a former investment banker
and joined my firm after we were married. I thought I might indicate some
of the discussion areas I would like to explore.

Just to remind you, I have launched a brand new course at Columbia
University, Graduate School of Business, titled Internet Financial
Management. The theme of the course is how companies can use the Internet
to create sustained excess shareowner returns. This theme applies equally
to pure-play B2B and B2C companies as well as to the bulk of traditional
companies that are trying to figure out how best to leverage the Internet in
their "normal" course of business. To describe this process I have used the
term "e-tizing". By that I mean the total transformation of a firm's
business processes such that all relevant operations and communications,
whether they are internal (i.e., among operating units and functions) or
external (i.e., between a firm and its customers, suppliers and alliance
partners), are performed on the Internet. Obviously the decision of where
to "e-tize" and where not to is ultimately an ROI question. (By the way, GE
uses the term "digitizing" for roughly the same notion.)

In order to make the course experience for the students especially valuable
and to provide a much broader exposure for Columbia in the Internet area, I
have departed from the typical course format in two key ways. First, since
everything is moving too quickly for a textbook to exist, I have assembled a
world-class group of lecturers who have kindly agreed to make the time to
join us. Second, the students are grouped in teams to work on specific
action learning projects with corporate sponsors. In addition, Geoff Colvin
of Fortune and I are writing up the lecturers and will craft them into a
series of Fortune articles. So far we have been very fortunate, the
speakers have been extremely accommodating and absolutely outstanding in
both content and delivery - not to create any pressure!! To give you a
feel, Terry Jones, the CEO of Travelocity, will be spending a good deal of
time on this coming Monday discussing the implications of what he has
learned, in creating one of the most effective Internet sales and marketing
machines, for traditional companies that sell to consumers.

As further background, the student teams are working with Applied Materials,
Travelocity, Trilogy and Barnes & Noble.com. This small set of companies
represents a nice cross section of B2B, B2C and more traditional brick and
mortar companies. Irrespective of the company setting, each student team
will be focusing on projects that deal with using the Internet to create
sustained excess shareowner returns. The target Fortune audience will also
cover a broad cross section of companies, but with an emphasis on
traditional non-pure play Internet enterprises.

Louise, with respect to your presentation, I would like for you to explore a
fairly specific set of issues so that (a) the student teams will be able to
use the learnings to leverage their projects with their sponsor companies
and (b) the series of lectures will mesh together very effectively for our
writing for Fortune.

For the non-pure play Internet companies, I want to use GE and Enron as best
practice examples. I have been meeting extensively with the GE folks and am
beginning to get a pretty good handle on what they are doing today and what
they are likely to be doing over the next few years. In the same vein, I
view my visit to Enron as having three primary goals: (i) getting to know
you and some of the Enron management team, (ii) getting a good understanding
of how your business is using the Internet to create shareowner value and
(iii) establishing a working outline for your session in April. Clearly (i)
and especially (ii) will form the basis for (iii).

I have scheduled the following times with Tammie to meet with you and/or
your team:
February 21: 12:00 - 3:30 -- Louise (work on (ii) and plan for Feb. 22)
February 22: 8:00 - 2:30 -- Work with other team members
February 22: 2:30 - 5:30 -- Louise (Review learnings and plan (iii))

A sampling of the kinds of questions I would like to investigate would be
the following:
- Is the essence of what you have accomplished the creation of a totally new
business or "e-tizing" a pre-existing business?
- How pervasive is the use of the Internet in the day-to-day running of
Enron? For example, has Enron gone the route of Cisco and GE in trying to
e-tize sufficiently to close your books globally on a daily basis?
- To what extent is the approach of your business to the Internet creating
or forcing compatibility of technology/information systems between you and
your "customers" (i.e., trading partners?) and "suppliers" (participants in
the physical value chain?)?
- We discussed the critical role of process definition and detailed mapping
to your success. Could you outline for us the process and what are the 5-10
major success factors and 5-10 "failure" factors?
- From a technology perspective, I believe you mentioned that you first
looked outside for a solution and found that typical ERP type approaches
would have required such massive modifications, that you felt "starting from
scratch" would be more valuable. I would like to discuss that in more
detail. Also, how did you systematically tackle the task? What was the
timeline? Having been through the experience, what are the key learnings
for next time --- what not to do, what to do more off and how to go faster?
- Also, on the technology level I would be very interested in learning about
the full set of technology building blocks -- including telecom, hardware
(servers, routers, etc.), storage (software and hardware), content software.
Also along those lines, what are the costs -- capital, set-up and
maintenance? (Should this be 2% or 10% of revenue?)
- How is the overall technology investment managed so as to get optimal
synergies and yet not impinge on the distinctive diverse needs of various
different businesses in Enron?
- How are you measuring "customer," "supplier," and operational metrics
differently due to your Internet efforts? How has this change the form,
content and use of your financials?

After reading this e-mail, if you have any thoughts please don't hesitate to
give me a call (212-688-2034) or send an e-mail message.

Yoko and I are really looking forward to our visit!!

Thanks in advance. Best regards,

Larry