Monday, 22 June 2015

How IT Departments Make Money?

How IT Departments Make Money?

One of the biggest challenges that the person with the CIO job has is that the department that they are responsible for is more often than not viewed as being a cost centre. What this means is that the IT department spends and spends and spends and never seems to actually bring in any money.  Now I know that we all know all about the importance of information technology; however, to the rest of the company IT sure can seem like a big black hole. However, things are changing and some CIOs are discovering ways that the IT department can actually generate money for the company.

How Waste Management Sells Its Services

Over at Waste Management, they haul trash to the dump. They haul a great deal of trash. Last year the company earned US$13.5B hauling trash. However, even when you are making that much money, you still would like to be able to make more. That's why Waste Management's CIO decided that it was time for the company to launch an ecommerce site.

The purpose of the Waste Management ecommerce site is to allow their residential and business customers to purchase additional services from the company. These services can include such things as renting dumpsters as well as getting quotes for both trash pickup and recycling services that are offered by the company.

What makes the Waste Management ecommerce site unique is that it has been designed and is being run by the IT department. What this means is that the IT staff that have been assigned to run the ecommerce site now have sales quotas assigned to them that they have to fill. In order to accomplish this, the IT department plans on adding new products to this site every two months!

From Trash Man To Logistics Consultant

The ecommerce website is only the first step in Waste Management's plans to transform their IT department into a profit canter. They plan on putting the IT department in the centre of additional customer-facing revenue-generating projects.

Waste Management's IT department is planning on putting mobile devices on their fleet of trash trucks. This will allow them to measure such things as load weights, the route that each truck travels, along with how much time is spent at customer sites and at landfills. This will produce a great deal of data that can be combined with the customer related data that the company already collects.
Once the IT department has all of this data, they plan on transforming the company from just being a trash hauler to now being a logistics consultant to their customers. With the data that they've collected, they believe that they can start to make recommendations to their customers regarding how they can change their trash habits so that they can save money and recycle more.

What All Of This Means For You

IT departments exist to serve the rest of the company. That's why in the past, the IT department was treated like a cost centre and nobody really worried about where the money was going. As things got tighter, IT budgets got squeezed and now IT departments are being expected to generate revenue just like every other department in the company.

Over at Waste Management, they've gotten very creative with their IT department. They've created an ecommerce site that the IT department is now in charge of in order to sell more of the company's services. They are also trying to transform the company from being a simple waste hauler to now being a logistics provider for firms.

Revenue opportunities exist for every IT department. As the person in the CIO position, you need to learn to keep your eyes open in order to spot where the revenue opportunities for your IT department lie. Get good at finding out how your IT department can generate money and soon enough your IT department will be making more than it spends!

Author: Dr. Jim Anderson
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