As each quarterly earnings season passes by during this postrecession era, it is clear that capital markets are more inclined to reward companies that report organic growth in revenue rather than companies that meet or surpass earnings expectations via cost cutting. While maintaining an operation at the lowest possible levels of cost is still imperative, enterprise executives well understand that, without revenue growth from increased customer demand, returning to a sustained period of economic recovery will be impossible.
Meanwhile, during 2007 to 2010, as clients around the world were meeting the challenges presented by the worst global recession in 80 years, certain IT-enabled initiatives continued to evolve.
Now, as senior enterprise executives around the world, especially those in nations hardest hit by the recession, search for ways to regain and sustain business levels prevailing before the recession, CIOs and other IT practitioners within those enterprises are weighing their options on how they will contribute to a return to sustained business growth.
Other factors weighing on CIOs:
- Overall, projected sales for 2011 in many major industry verticals will still not have returned to prerecession levels, especially in much of North America and in Europe.
- During the postrecession recovery period, enterprise executives will prioritize growth initiatives.
- CIOs seeking to deliver maximum value to their enterprises during the postrecession recovery period should:
- Continue cutting costs
- Seek ways to help increase enterprise revenues (for private- and public-sector organizations)
To determine which IT-enabled initiatives could deliver the most favorable impacts on enterprise growth and, therefore, would be most worthy of client consideration, we weighed a number of potential IT initiatives against a hypothetical enterprise income statement. As a result of this analysis, we found that seven IT initiatives actually passed this theoretical test. Furthermore, four of the seven possess the typical attributes of helping reduce enterprise cost and increase productivity, and stand ready to increase enterprise revenues:
Context-aware computing — This is on a trajectory toward becoming more sophisticated than simply relying on rudimentary search, location and physical presence features.
Pattern-Based Strategies — The arrival of two recessions within one decade in a number of developed economies increased awareness of patterns of behavior and thus their ability to be detected.
Social networks — The global recession did not stop the ever-expanding reach of social networks. Evidence continues to mount, highlighting there are few forces more powerful than the influence that friends or peers have on consumer buying decisions.
New realities of IT — IT staff innovation can be channeled toward enterprises’ new product development.
During the recovery period in North America and Europe, or the ongoing expansion period in Latin America and Asia/Pacific, the greatest business contribution CIOs will be able to deliver to their enterprises during this decade will be to help increase enterprise revenue growth.
Welcome to the era of the money-making CIO.
The Six Styles of the Money-Making CIO
Information- and knowledge-based initiatives currently evolving today will open a galaxy of new business expansion possibilities during this decade. As CIOs agree to lead their staffs toward creating and capitalizing on the new business models that will unfold between 2011 and 2020, at least six distinctly different styles of the money-making CIO will likely evolve. Following is a brief summary of each style:
1. The entrepreneurial CIO — This model will involve the CIO being responsible for generating sales from, for example, intellectual property their staffs may have initially developed for internal purposes but whose revenue-generating potential via external sales will be far too compelling to ignore. Such CIOs will still have the responsibility of overseeing traditional IT planning, design, implementation and operations.
2. The cost optimization CIO — These CIOs consistently help enterprises to reach or surpass quarterly earnings targets by continually improving IT procurement, operations and decommissioning methods. They will always be welcome members to enterprise strategic planning committees.
3. The revenue-generating CIO — This type of CIO will identify and guide enterprises toward exploiting IT technologies, products and services that will measurably increase enterprise revenue (the subject of the remainder of this report).
4. The business innovation CIO — A CIO adopting this style of leadership will place IT staff members within the product or service development areas of the enterprise.
5. The business development CIO — Perhaps the most controversial style, this completely transfers all IT operational responsibilities to another senior enterprise executive (for example, the COO). Similar to a cross between a building architectural firm and a construction general contractor, these CIOs will retain and enhance their IT-business planning, designing and implementation responsibilities. Over a short period of time, such a CIO will cease reporting directly to a CFO and begin reporting directly to the head of business development.
6. The public-serving CIO — The opportunities to become a money-making CIO are not restricted to the private sector. Public-sector money-making CIOs will capitalize on the time value of money by significantly shortening each tax-receipt-related government process with the public
(This is excerpt from “The 2011 Gartner Scenario: Current States and Future Directions of the IT Industry”)