It's All In The Mind

IT has

certainly become an essential part of each and every business. What initially

started as a requirement for research computing has become a necessity for

almost all business verticals. Today, business without IT cannot be imagined in

many areas.

To discuss the subject

of IT as profit center, let us consider two scenarios-In house IT departments

and IT departments hived off as separate IT companies.

In house IT departments



This has been the general approach which large corporates and big time IT

users in BFSI, manufacturing, healthcare, travel, hospitality etc have been

following over the years. The responsibility to conceptualize, develop and

implement solutions for these user organizations lies with their IT departments.

Though the IT solution is for the organization, the IT department has been seen

as a cost center, putting budgets under pressure. Under this scenario it would

be interesting to see how an IT department can be presented as a profit center.

Some thoughts:

C Kajwarkar CIO, NSE.IT

Develop

Effective Business Case: To provide a solution to business unit, a

CIO often goes through a phase of decision-making involving many dimensions:

• Make or
  
  buy

• Own or
  
  lease

• Develop
  
  IT solution as per existing business process or modify business process to
  
  suite available solutions

• Dedicated
  
  solutions to own need or shared solution

• Conduct
  
  the business process or outsource

CIOs invest significant

time in optimizing the costs through various means (negotiations is one of the

most favorite) but all said and done, it is seen as cost for the business.

Therefore it is necessary for CIOs to learn how to bring out the 'business

case' of IT investment in a more effective way.

If possible all the

direct, indirect, tangible and intangible benefits should be converted in

monetary terms and weighed against the investments. In most cases, IT solutions

would bring lot of operational efficiency, reduced paper work, streamline

procedures and improve customer satisfaction. These factors can be used to bring

out intangible benefits.

Stay

Flexible: Choice of solution,

technology, even place could have impact on profitability of IT. Therefore stage

of conceptualization is extremely important. A solution implemented today should

give you flexibility.

IT departments as separate IT companies



In the last few years, there has been a change in the thinking of large IT

user organizations. These organizations want to leverage their strengths as IT

users in their respective domain areas by providing products and solutions to

same or similar industry. There are global as well as domestic examples. It is

indeed interesting to see this change.

These IT organizations

generally have dual responsibility. They need to continue providing all IT

services to their parent organization exactly like their previous role as 'in

house' IT department and also develop market for themselves with healthy

bottom line. The challenge of remaining profit center in such scenario is

totally different. Such organizations should strive to make more business from

external customers than parent organization.

A good SWOT analysis as

IT department would give clarity of core strengths of the people in the

organization. SWOT should not be limited only to domain knowledge, technical

skills and count of people. Since the role of people would change from a

'customer' to 'service provider', factors such as customer orientation,

responsiveness, etc also need to be considered. Ultimately in long run customers

judge the organization as a package.

As told to Bhaswati Chakravorty 



bhaswatic@cybermedia.co.in