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Is Your IT department an Untapped Revenue Generator?


29 Jul 2020 | Andy Ross

Dear CEO

How do you see your technology team? As a cost centre for the organisation or as an untapped revenue generator with limitless potential to shape a prosperous and meaningful future for your organisation?

With many organisations now either seeing themselves as, or seeking to become, a digital business now is the time for IT to elevate from a mere ticket operated support service, (have you switched it off and on again?) to instead becoming an additional revenue stream that not only drives the organisation towards its financial goals but opens up new capabilities, new offerings and, even new markets.

IT departments have the ideal vantage point to see where innovation has the potential to make a big difference throughout their organisations says Merim Becirovic, global managing director for global digital infrastructure at Accenture. This insight then must be harnessed, through innovation, in a way that can make money for the organisation. As the organisational landscape shifts and every company seeks to become a digital company, expanding technological capabilities to your customer offering becomes a necessity not an option.

While the drive in this shift is very much seen as consumer led and the ever-increasing expectations with regards accessibility, transparency, flexibility and ease of use, there is also an internal push with 64%*of CEO’s wanting their IT department to focus on how to make money rather than save money. So how can technological innovation become a profit centre, especially if you don’t currently see your organisation as a digital business?

Here are five ways you can make it happen.

1. Identify the opportunities

Every organisation has the opportunity to turn technology into a profit centre, in a variety of ways. However, there are three main routes to achieving this goal.

Digital products and business models. Shift from selling physical goods or services to selling digital products. This can often be combined with selling subscription or SaaS models. For example, large plant machinery can be sold with IoT analytics platforms to manage maintenance and optimise performance, an opportunity the oil and gas support firms have taken advantage of.

Monetising your existing technology assets. This could easily be a quick win. Organisations that have developed exceptional software for their own internal use are finding new revenue streams by refactoring it for use by customers and other third parties. If your organisation has a demand for the software, then there will be others out there with that same need. Two great examples of organisations that have successfully achieved this are Amazon, selling cloud computing and establishing AWS and Ocado pivoting from an online supermarket to a provider of online supermarket software and technology. Amazon’s AWS now generates over 70% of their total revenue, not bad for a side-line project!

IT services. Look at your existing customer base and their needs. How can these needs be met by the development of technology-based solutions? A number of large engineering consultancies have made this shift and now work with their customers developing custom software to meet their specific requirements. An example of this is the move McLaren made. The F1 team started to sell their expertise in developing advanced software (as well as hardware and manufacturing processes) to other organisations. Their expertise in real-time data, low latency and high-performance computing enabled them to advise on and sell technology services.

2. Elevate IT to a seat at the top table

Your technology team need to be involved in shaping and executing your business strategy. Too often IT sits below the COO which means it has a supplier like relationship to the rest of the organisation. IT functionality is at the forefront of innovation and digital so use these opinions, experience and skill sets to help the whole organisation shape its future in a digital world.

3. Adopt a product mentality

Consider the journey of your customer. How can this be productised to add value, to simplify or even to diversify the route the customer takes? Providing alternative pathways, enabling additional capability, new touchpoints or greater visibility all add value to the customer experience and potentially give customers something they have never had before; which itself becomes revenue generating. Brands that have superior customer experience bring in 5.7 times more revenue than their competitors** so the benefits are clear, but the output is much more than simply producing a good product or service it is about truly understanding the customer, their journey and continuously seeking ways in which to improve it. This isn’t a onetime process it is a continuous evolutionary cycle.  

4. Attract and develop technology talent

This is often easier said than done as exceptional talent is in demand and it can be hard to compete with the likes of Google or Facebook when it comes to attracting that talent into your organisation. This is why many traditional organisations are looking to reinvent themselves in order to attract them, however, being clear on exactly what talent you are seeking to attract is crucial, understanding the digital profiles and ensuring these match against the expectations of your organisation and the role. Talent will also be attracted to the opportunity to innovate and an employer who will enhance their professional development and learning opportunities. The other option is to recognise and nurture talent that already exists within the organisation, propagating exceptional talent from within through training and certifications. Alongside the digital talent, non-tech staff can be trained to become technology literate, either to increase internal functionality or potentially unlock new capabilities. With the demand for exceptional tech talent far outstripping the supply, developing in house talent could be the answer.

5. Integrate business owners and digital officers

While the need for traditional IT functions will remain, removing the siloed functions of “the business” and “IT” and having the two teams integrated, working alongside one another with common goals will open the door to innovation and digital advancement. While there will still remain a traditional operational element of IT to ‘service the business’ the wider skills of the team can be harnessed to develop business opportunity and the customer journey with a product focus

The opportunity is there, the capability exists, now is the time to innovate. This is your organisation and you have the power to unlock and unleash the capability that already exists inside it.

With warmest regards

Andy Ross


Gravity 9

*Harvey Nash / KPMG CIO Survey 2019