The days of CIOs being strictly Information technology specialists are long over.
The earlier focus on IT Heads was to ensure that the various components of their information systems were functioning properly or in simple language keeping the lights “ON”.
But as organisations have evolved on their technology journey, IT is no longer a back-office or cost centre but at the centre delivering the core business services and thus acting as a major contributor to the topline.
John-David Lovelock, a research vice president at Gartner has rightly quoted that “Often, new products and services can’t be launched without IT, and it’s also becoming the point that IT is the product or service being launched.”
When Bill Gates, (the founder of Microsoft) shared his vision of putting a personal computer on every desk and in every home, many of us would have laughed. In 1995 he wrote an internal note to his executive staff and direct reports stating “The Internet is a tidal wave. It changes the rules. It is an incredible opportunity as well as an incredible challenge”. As a true visionary, Bill Gates saw what ordinary people failed to see.
Thinking about the 26 years I have spent in the technology industry, in my experience, the fastest pace of innovation has been in the information technology function. The size of computing devices has been shrinking but their computing power has been increasing. With the evolution of increasingly sophisticated applications, IT-led teams have consistently found new ways to streamline enterprise business processes, vastly improving operating efficiency, reducing costs and generating new revenue models.
Some examples where organisations have successfully leveraged IT as a revenue generator are:
HP/ Canon – Most print manufacturers make a profit from the consumables such as ink cartridges or toners rather than the printer itself. Initially, individuals who had personal printers were buying cheaper alternatives to original ink cartridges or toners. Realising a loss of revenue, the print manufacturers saw an opportunity to use technology to sell subscription services to their users. Now based on your average printing needs per month, you pay a monthly fee to the printer manufacturer and they use sensors to monitor your usage, print count and ink/ toner levels. Once the ink/ toner reaches a level where they need to be replenished, the printer manufacturer will send you the same in the post to be delivered to your address. Therefore, using technology, the print manufacturers or OEMs have built a sustainable revenue stream from their printer sales.
Peloton – Stationary bike start-up Peloton has made it possible to get instructor-led workouts without stepping foot in a gym. Started in 2012, the company has transformed into a fitness sensation with a huge fan and subscriber following. Using technology and connecting their bikes to the internet, they bring exercise classes home giving you a gym experience in the comfort of your home.
Walt Disney World – Disney World visitors can be outfitted with the company’s “Magicband” which contains RFID tags. The band allows the guests to buy concessions and gain entry to rides by tapping it on locally positioned receivers. The company can then collect the data from the park’s visitors and make determinations on which attractions are the most popular and where attention needs to be taken to improve the guest’s experience.
Specsavers – No longer you need to step out of your house to order your prescription sunglasses or a new pair of glasses if you are bored with the current one. UK’s leading chain of opticians has used technology successfully to enable their customers to virtually try on different frames and select the best option to order online by providing the details of your prescription.
Nike – eCommerce has given us the convenience of buying almost everything from the comfort of your home. However, when it comes to shoes or clothes, we all face a problem in choosing the right size. To overcome this challenge and offer the right sized shoe to their customers, the company has launched Nike Fit, a new scanning solution that uses a proprietary combination of computer vision, data science, machine learning, artificial intelligence and recommendation algorithms. It does this by measuring the full shape of both feet, offering the ability to know your truly perfect fit for each Nike shoe style. Using your smartphone’s camera, Nike Fit will scan your feet, collecting 13 data points mapping your foot morphology for both feet within a matter of seconds.
When it comes to determining the meaning of IT as a revenue generator, there are two most important areas that can help meet this objective:
- Improving the customer experience
- Developing new products and services.
Both these areas are not mutually exclusive and to ensure IT acts as a revenue generator, companies need to focus on both of these aspects.
As a result, customer experience (CX) / user experience (UX) has been an important skill in demand over the recent past.
It is most critical that IT help enhance the customer experience through the innovative use of new technologies and applications. Customer retention and, potentially, boosting customer spend is now the main objective for most organisations.
The role of CIOs has evolved, and the new age CIO requires a different set of competencies compares to 2 decades ago. CIOs know alignment with the business is vital and many smart CIOs are taking charge of revenue generation. They are getting a seat at the executive table during the organisation’s strategy development, specifically around growth strategies and initiatives to drive revenue.
IT outsourcing needs no explanation and has been an operating model in place for a number of years in various organisations.
However even the IT outsourcing model has matured, and your outsourcing vendors are now working as partners with their clients to support innovation and identify new revenue opportunities for their clients.
IT outsourcing partners are no longer shy of putting their skin in the game and working on a risk-reward model to build trust and long-term partnership with their clients.
Artificial Intelligence and Machine Learning (AI/ML) capabilities are greatly impacting decision-making across the enterprise value chain. As a result, AI and ML are being embedded into various functions of an organisation and can help enhance new revenue opportunities.
Acquiring new customers and increasing the revenue from an existing customer is an important aspect of revenue generation for businesses in any sector.
In the current world, marketing and sales departments across organizations are relying on applying machine learning and artificial intelligence on their CRM data to discover better selling strategies that could attract new buyers.
In addition, organisations need to be ahead of the curve in anticipating market trends, being prepared for customer queries and having a holistic product or service overview enables faster selling.
A simple example would be the case of a product recommendation on Amazon. Every time a user skips buying a recommended product based on keyword search for something specific, Amazon’s machine learning algorithms work in the background to understand your preferences/choice to alter its recommendation engine to ensure that the next time, the buyer starts showing more positive responses towards the suggestion.
Over the last two decades, lines between IT and the business have blurred. Executive leadership in organisations have realised that as a business without technology they couldn’t compete and IT which was once considered an expense; is now considered to be a valuable investment or asset.
Going forward more and more organisations will need to look at IT to increase the top line. The CIO is uniquely positioned to play a major part in the overall success (and profitability) of their organisation. Technology leaders should continuously search for opportunities to improve their companies through the implementation of digital technology.