IT's new assignment: Generate revenue
Sure, all CIOs seek to add value, but some are taking their quest outside the walls of the enterprise by targeting customers directly.
April 22, 2013 06:00 AM ET
Computerworld - James Quinn was primarily thinking about helping customers, not making money, when he gave his IT team a task.
The PHI Inc. CIO challenged his staffers to find ways to deepen the level of engagement between PHI, a Lafayette, La.-based provider of helicopter services, and its customers, including some of the world's biggest energy companies -- which rely on PHI for transportation to oil rigs in the Gulf of Mexico.
But Quinn was perfectly happy when the suggestions went beyond customer engagement to include actual revenue.
"I tasked the IT department to come up with ways to integrate with customers, so they'd have some loss if they moved away from us," he explains. "We were looking for some value-add, and it just happened to turn into a revenue-generating set of products."
One of those products was Helipass, a full-size kiosk that connects to a Web-based application to provide customers with passenger and baggage manifests. Others included new hardware and SaaS offerings.
Quinn projects that the products will bring in $1.3 million to $1.5 million the first year and $20 million in annual revenue by year five. PHI took in nearly $540 million in revenue in 2011.
It's no mistake that Quinn's 76-member team hit pay dirt by turning its focus from internal PHI operations to the operations of its external customers. It's an endeavor outside the traditional scope of work for IT departments but increasingly on the radar of forward-thinking CIOs.
"Most CIOs are internally focused, and that's a big enough job as it is," says Frank Scavo, an analyst at Constellation Research. "When it comes to delivering smart products to customers, it's usually in the product development or marketing group. It's unusual to see CIOs stretch into that role, but CIOs are looking at ways to deliver more value to the organization."
Here's a look at how Quinn and other IT leaders got their teams involved in revenue-generating endeavors.
PHI: Filling a Customer Void
Two years ago, Quinn's staffers identified a gap in how the company's clients tracked shipping and travel information. As the former owner of a software development company, Quinn drew on his entrepreneurial experience to come up a five-year plan to develop software and hardware to fill that void.
His team developed a system that includes kiosks, small wall-mounted machines akin to ATMs and Web-based software that tracks employees and freight from helicopter and ferry terminals out to sea and back. The software, which PHI sells and supports in a software-as-a-service model, also tracks employee HR information, such as compliance with safety and training requirements. It's designed to work on a range of devices, from tablets to desktop PCs, says Quinn.
Protect Your Intellectual Property
As IT departments dip their toes into the waters of the commercial marketplace, they need to be mindful of the twin needs to protect their intellectual property and avoid infringing on the intellectual property rights of others.
After all, you don't want to develop a critical application only to later learn that some piece of code wasn't yours to use, or find that a competitor managed to come to market with something similar because you didn't take necessary legal precautions.
That's why the development process in the IT department at GE Power Generation Services includes a review by an internal control and compliance team. That team looks at whether a proposed project could infringe on any other entity's intellectual property rights or whether it needs any IP protection to guard against infringement by others.
"We're taught very early in our careers at GE to think about infringement and protection," says Jim Fowler, CIO for GE Power Generation Services. IT workers attend training on copyright and IP protections so they learn to keep these issues in mind as they work, he explains.
IP attorneys say that's a smart strategy, since technology increasingly is what differentiates one company from the competition.
"Any time you [develop] software or hardware, you want to make sure, first, that you can do that -- that you're not violating someone else's IP rights," says attorney David Burns, a partner in the Boston office of McCarter & English. Second, companies need to ensure that they're safeguarding their investments via some sort of IP protection, he says.
Robert J. Tosti, a partner in the Boston office of Brown Rudnick, says companies should follow these three basic steps, whether they're developing something for internal use or external sale:
Determine whether the proposed product violates someone else's IP rights, including a licensing agreement or a patent.
Ask what kind of protection might be needed. Software is automatically protected by copyright, but copyright protection has limits. Some applications can be patented, which offers a higher level of protection, Tosti says.
Consider asking employees to sign confidentiality and nondisclosure agreements to ensure that anyone who leaves the company won't share proprietary information.
The cost of taking those steps in advance may reach into the thousands, say Tosti and other IP attorneys, but the cost of addressing an IP problem later on is often much higher.
— Mary K. Pratt