Can IT Open New Sources Of Revenue?

Every once in a while I get the opportunity to completely immerse myself in one of my client's problems. This time, it was at an IT strategy offsite where a senior director of IT asked me one simple question: "How can we use information technology to help our company open up new streams of revenue?" I found the question refreshing, mainly because nine out of ten CIOs I talk to these days ask the opposite: "how can IT reduce costs?" 

Fortunately for me, this client had invited lots of smart people from business and IT and outside experts into the room for two days to explore the revenue question. Challenges familiar to most life sciences companies got folks in the room in the first place: patent expiration foretold eroding profit margins for their blockbuster drugs, and expansion into emerging markets was an avenue for growth, yet one fraught with complexity and uncertain returns. 

So this group's charter was to think digital.

Taking inspiration from morning TED talks, four working teams presented ideas for revenue opportunities created by emerging technologies in tech markets like mobile, big data, security, and consumer experiences. The teams cited creative ideas — like algorithms that use public data sources to reduce production forecast variance and improve distribution allocations; modern IT security models, pioneered in financial services, that would enable them to cut the time it takes to on-ramp a new manufacturing partner from months to weeks; company-owned data that could be sold or licensed and made available through public APIs to third parties; and many more. 

The teams shared inspiring ideas that were big enough and bold enough to at least warrant further investigation.

But as often happens in IT strategy discussions, there were debates aplenty that got mired in the barriers the current IT organization faced in incubating and ultimately commercializing nascent revenue-generating ideas. Topping the list: Rigid contracts with outsourced providers hampered innovation and speed. Low, no, or shrinking budgets. Limited insight into end-customer needs. Aging systems that vacuum up already scarce resources. Internal IT talent drain wrought by years of outsourcing. And many, many more. 

These barriers haunt many large IT shops, I find.

Reflecting on the offsite, there were three things that separated the successful and unsuccessful presentations as workgroups pitched ideas to a panel of business executives and outside experts. The successful teams:

  1. Framed all IT barriers around the impact they had on customersThe IT leaders who looked at problems through the eyes of the end customer garnered far more influence and support from the audience than those who looked at problems through the eyes of IT.
  2. Told stories about revenue opportunities through imagery. Something that's easily forgotten amidst the engineering culture of IT — the standout IT leaders were those that could mask IT complexity through imagery, and tell visual stories that cut right to commercial opportunity. (Not a single architectural diagram made its way into the highest-impact pitches.)
  3. Used facts and data to quantify their assertions. While many of these IT folks were clearly uncomfortable using data — like consumer health technology trends and business technology adoption trends — to bolster their arguments, those that did clearly garnered trust among business leaders weighing which investments made sense to explore further.
I'll remember these simple lessons when advising my IT clients who were raised in the cold, hard world of engineering. Unfortunately, we won't know for a while whether these ideas will translate into new revenue streams for this client. But it was great to see the passionate ideas for change shared by IT leaders in such a large organization.
 
Driving growth through Digital Disruption is the theme of Forrester's CIO Forum this Fall. We're assembling a terrific line-up of speakers, content, and peer interactions to share ideas on growth opportunities IT organizations and emerging technologies can create for Forrester clients. We're very pleased to have Ajay Waghray, CIO of Verizon Enterprise Solutions, as our industry speaker joining Forrester analysts James McQuivey and Bobby Cameron to share their perspectives on questions like: How can IT become more customer-focused? What new opportunities do emerging technologies create for growth? And, what is required of IT leaders to incent and organize around disruptive, technology-driven growth opportunities. 
 
For more information on the event, click here.
 
I hope to see you there.

Comments

New Sources of Revenue

I believe there is an emerging market for cloud integration services that would enable a company to "plug in" to the cloud api from there application(s) either behind the firewall or XaaS and be able to integrate to that providers ecosystem. The cloud provider with the largest ecosystem wins here. The client that consumes these services can take advantage of the various revenue sources more quickly, thus achieving time to market and new sources of revenues if done correctly. This capability will require cloud integration providers to rethink how they wire and integrate to there ecosystem, but the opportunity does exist.