CIOs don't have to stop at saving their organizations money by trimming expenses and improving productivity. Some savvy IT executives at non-tech, midsized companies are actually generating funds, adding to their own budgets or placing monies into the organization's overall coffers.
Not enough companies are acting on this, though: 52 percent of respondents to a recent survey said IT's primary job is to improve efficiency in business, according to the survey of 474 respondents in the United States, United Kingdom, Germany, and Japan in late 2012, conducted by Economist Intelligence Unit and sponsored by Juniper Networks. However, 20 percent more of the high-performing companies say technology played a very strong role in their organization's financial performance; 11 percent more of the high-performing companies strongly agree the IT function can support business growth by identifying new market opportunities; and 8 percent more of high-performing companies say IT is very closely involved in helping develop new products and services than compared with average businesses, the study said.
These organizations often are leveraging technologies like cloud, analytics, or web development to create services they can resell to other companies. Or their IT teams are developing tech-based offerings that external customers will pay for. Some are taking internal services and repackaging them for external sale.
Let's take a look at several to see how your peers are differentiating their organizations and adding financial value.
City of Melrose, Mass., partnered with ePlus Technology to design and create MuniCloud, a cloud-based infrastructure that it shares with more than 350 other cities and towns using a unified storage environment. Melrose saves money -- and generates additional revenue through MuniCloud sales.
PHI, a provider of helicopter services, wanted IT to deepen customer engagement, CIO James Quinn told Computerworld (free registration required). The technology team came up with income-generating ideas such as a full-size kiosk connected to a web app that gives customers passenger and baggage manifests, along with other for-profit hardware and SaaS offerings. In fact, these projects could reap up to $1.5 million in additional revenue this year, and up to $20 million within five years, he said.
Wharton Research Data Services spun out of the University of Pennsylvania's famous Wharton Business School, when about 20 years ago staff recognized that faculty spent too much time on research, Deirdre Woods, associate dean and CIO of Wharton Computing and Information Technology, told Forbes. Today, WRDS connects more than 30,000 individual academic, institutional, and corporate users in 27 countries to data from over 40 vendors on one platform -- and leverages the school's expertise in research and technology.
K. Hovnanian Homes designed StyleSuite to allow homebuyers to consider different options such as house layouts, cabinet styles, and lighting, although it doesn't include pricing or buying features, according to CIO. The web-based tool was a joint venture between the homebuilder's sales and marketing and IT teams.
Mazda North American Operations replaced the company's outsourced disaster recovery with a virtualized solution, part of the automaker's move to a cloud and virtualization infrastructure, he told me last year. When Mazda North America saved money by moving employees to virtual desktops, the IT department kept those dollars internally, using the funds to offset the expense of additional wireless access points, an upgraded network backbone, and more storage. While it didn't generate revenue for the car manufacturer, it increased IT's self-sufficiency, enabled IT to meet employees' wish to become more mobile, and met the overall corporate goal of cutting costs.
Zooming to Profitability
Some midsized organizations, like Mazda North America, at times may choose to turn cost savings back into their IT operations in order to support initiatives like network overhauls and expanded mobility services.
I haven't spoken to Mazda North American Operations' CIO Jim DiMarzio in a while, but when we last chatted last year, his IT team was also doing quite a bit with mobility and web apps. Because so many brands are building, or attempting to construct, relations with consumers and partners, this is a natural fit for both free and revenue-generation projects.
Cloud, big-data, and analytics could also be good fits, depending on an organization's scope and expertise. Like any product or service, an IT department's revenue-based offerings must be a natural extension of the company's original charter. Since IT should already be tightly integrated with day-to-day operations, ideas should be coming thick and fast.
As my colleague Kim wrote today, one IT department helped its school district reap new revenue by implementing an automated workplace management solution. Palm Beach County SD's use of IBM Tririga helps it generate $4.5M annually on leasing out previously unused space to church services, SAT and ACT prep, weddings, and other functions, Kim wrote. It's a great article by Kim and gives some good insight into some opportunities that are readily available for some organizations if they just open their eyes a little bit wider!
True for internal support, but customer support is often an untapped gold mine of customer information. It's a direct channel for finding out what bothers customers most about a company's product or service.
Anyone who does not think outside the box and is innovative in how it approaches its' mission is frankly asking for trouble. The risk of IT being a commodity is something that IT departments must guard against...as long as the "Niche" is recognized. The case studies are fascinating..to say the least....
Great point, @Kichecko. That's actually an awesome idea, especially when you read all the pieces like David Strom's blog about IT hiring; my piece on CISOs, and Kim's article about the shortage of cloud skills, among others recently posted on IE. Why not leverage all that great expertise you have inhouse and offer web-based and mobile-accessible training?
I don't know if it's becoming the norm, Sam, but it's certainly becoming more common, which is exciting. When organizations see more examples of CIOs and IT departments that can make money without getting distracted from their core responsibilities, I think it gives them the freedom to consider other offerings they can deliver to even more customers beyond their traditional end-users. IT's partners -- solution providers, vendors, suppliers -- are a great sounding board for ideas that may have more widespread appeal.
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