Driving the Bottom Line

Tying into my “No Better Time” Blog (posted 5/14/13) addressing the top line, this Blog will focus on the bottom line.

How IT leaders drive the bottom line:

Another way to say this is how does the CIO get leverage from what he or she does? There is leverage from scale, and from being more efficient in the way the business is done (process harmonization).

Here are some thoughts on what to focus on as you leverage IT for bottom line management:

  • Keep the lights on. Sorry to start with this, but if you don’t offer a great service to the organization you won’t be taken seriously at the top. Your stuff has to work – all the time.
  • Get sourcing right. Negotiate effectively with vendors. I have seen a lot of contracts go wrong because CIOs were too hard on vendors. Vendors can really help. Let them make a fair buck.
  • Analyze IT demand and build a plan that delivers the capacity you need without getting trapped in technology dead ends. Cloud now offers amazing opportunities to manage this equation and deal with spike demand.
  • Get your IT standards in place. This is often about architecture and balancing control with innovation.
  • BYOD. May not save you as much as you expect, but the plain truth is that Consumerization is an opportunity that CIOs need to embrace. And let’s face it; the consumer-oriented products are way cooler than what the enterprise offers!
  • Harmonize process. There are great opportunities when a new platform is installed to harmonize business process and reap organizational efficiency. The CIO can be a major player in getting this right.
  • Embrace the Cloud. Cloud offerings in applications, infrastructure and platforms can have an enormous impact on an organization. Figure out what is suitable and make it happen; you can free up $ in base cost and offer some really cool stuff.
  • IT Governance. It is important, and will catch you out if not done right. Get the right level of business participation, have decent portfolio management – so the IT spend is understood and committed to, and then execute well.
  • Security. Increasingly important with Cloud, Consumerization, Social and Mobile. There are just so many more ways the bad guys can infiltrate. This keeps the CEO up at night, and if you get it wrong, you are out of a job!

There is, however, a balancing act that the CIO needs to understand that hinges around centralization vs. decentralization. Some IT shops want everything centralized for maximum security, cost management and control, but business users typically want IT decentralized for increased speed and flexibility. What’s a CIO to do? Sorry, there is no simple answer here. It all depends.

Randy Spratt at McKesson has a great perspective on this and here is what he is doing:

For the top line stuff – growing revenue – he has adopted a more decentralized strategy. So the new products and new markets initiatives that I referred to are very decentralized, then as those new products are adopted into the organization there is more control. This ensures that customer satisfaction and experience standards are met. When the products become more mainstream, they are standardized for process and operational efficiency and finally, when the products are commodities, the focus moves toward bottom line cost management. It’s a great way to think about lifecycles.

You probably don’t have Randy’s scale and scope so his example may not fit, but the positioning of your IT department on the continuum of “total control” to “anything goes” needs to be thought through carefully. The lesson to take from Randy is this – the centralization versus decentralization challenge is not uniform across an organization, its products and processes. You need to decide what approach makes the most strategic sense for your company right now.

Kim Stephenson of Intel has a really interesting quote around this – she says “there are no IT projects – only business projects”. This is a great mantra, and key to understanding your role as CIO. You are there to add business value.

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