Friday, November 09, 2007

Moving IT from a Cost Center to a Revenue Center

I have had many discussions with CIOs and VPs at leading engineering & construction firms about strategies that allow the IT department to be more responsive to business unit needs, as well as assisting in the development of revenue generation. I'm not sure there is any 'silver bullet' for acheiving this, but I can recount some strategies deployed by a variety of firms; each might provide some value.

Establish a working group of IT and Business unit executives

These groups are usually informal without specific reporting lines or cost center allocations. A key component is identifying a number of champions and giving them flexibility to work between business units and the IT department itself, in order to identify and develop best practices in collaboration, data management, and asset management, for examples. The inviduals involved are usually senior or executive level from both the business and IT side; the goal is not to discuss specific features & functions or toolsets, but to review the overall business drivers, competitive advantages (and disadvantages), resources available & required, and align technology needs to that landscape. A key advantage of this arrangement is that the business unit leaders get to exchange ideas on what technology solutions are working with what vendors, with the IT executives facilitating that exchange of ideas. IT then can build consensus much faster on technology purchases, as well as leverage its purchasing power with vendors.

Empower IT at the business group level

The IT department at one global E&C has worked closely with two of the major business units in growing their revenues, and have been incorporated into specific bid opportunities. In particular, we have seen instances where the E&C client (industrial and government) seeks an E&C to partner with its internal team, and create a seperate business unit or company to program manage and construct a new facility. In these cases, IT's ability to communicate its mission, training program, IT investments, preferred toolsets, and flexibility to adapt quickly to new business process needs is paramount to success.

In most of these cases, the corporate IT group serves as more of an advisory role to the business unit teams, and also provides more oversight around back office systems and network management. The business unit IT team takes the lead for revenue generation opportunities and associated requirements at that level.

In a similar vein, I have talked to a VP of HR at another E&C, who has told me that they are playing an integral role in proposal development and bid presentations; in these cases, the HR team is providing value by demonstrating that the E&C has an effective program for attracting and training professionals who may be incorporated into the clients projects (which are multi year and multi million $$ in size).

Create a knowledge management network

Every firm has a number of practitioners and leaders that take it upon themselves to develop new services and revenue streams, and serve as leaders of change across the organization. Given the growth of a number of E&C firms via acquisition, these 'champions' can reach across business unit and IT departments, and streamline integration efforts (of technology, organizations, and culture).

I have worked with one company that has funded a senior level professional to build a knowledge management network, with a budget for specific business process and technology development. Their focus is initially around advancing 3D modeling and BIM processes beyond just buildings, and into plant and industrial design. Members of the working group initially are 'champions', with the goal of including key engineering managers in each business unit over time.

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