Where do we go from here?

As 2003 quickly comes to an end, it’s a good time to take stock and look at “where do we go from here?”  First of all, do we know where “here” is?

In the past year, many companies were into trimming out all of the “fat” from IT budgets – server consolidations, staff layoffs, employing technologies to save money and more. Companies that were effective at squeezing costs out of their IT organizations are now running very lean. So with little to no more fat to cut out, what do companies do in the coming year?

There are three choices. First, they can hold the course and keep moving forward with the status quo. Second, they can continue the downward spiral and continue to downsize and cut services. Third, IT can become the catalyst for developing new revenue opportunities. Let’s look at each of these alternatives.

Staying the course is a “safe” choice, assuming that all of the expendable fat was already cut out of the budget. Or the second choice of continuing the downward trend may be a necessity for survival of the company. However, neither of these strategies offer good prospects for the company. Competitive advantage is never gained by “playing it safe” or sitting around and waiting for things to get better. Even without a miraculous economic recovery, the third choice is the only viable choice. Why?

The world has changed in a short span of time. The dot-coms had an interesting effect on IT by raising the importance of IT to the business. The problem is that the economy turned south and companies hunkered down into their cost cutting/efficiency mode. ITers have been busy dealing with these cost cutting measures, and not necessarily having the time to look at the revenue side of the equation.

It’s my contention that in order for IT to truly become an enabler that maximizes a company’s revenue opportunities, companies must have personnel who can straddle the line between business and technology. In other words, the IT staff must be able to understand the business goals and objectives of the company, while having the ability to creatively apply technology to provide competitive advantage. At the same time, business leaders must have a high level knowledge of technology, so that they can spot opportunities where technology can provide much needed differentiation to its customers. In short, IT and business managers must learn something about the world in which their counterparts operate. It is then that innovation and creative use of technology is possible. 

Another reason that companies must explore creative ways of using technology for revenue growth is that there is no more blood to squeeze from the turnip. The reductions on the cost side of the equation have been made, which may have had short-term results of temporarily improving the bottom line. But there are definite limitations to this strategy. The only action that remains to improve the bottom line is to increase the revenue side of the equation. This can be accomplished through the efficient development of new business initiatives or applying new enabling technologies to cost effectively increase revenue streams.

At the heart of these actions, is having the ability to effectively manage these new revenue opportunities. In some cases, creatively applying technology can squeeze out additional costs or save lost revenue opportunities that couldn’t be eliminated before, such as minimizing the downtime of a Web site during periods of peak activity.

So as we face a new year, if you haven’t done it already, make a new year’s resolution to learn about your company’s business. Then take that knowledge, combine it with your knowledge of technology and think creatively about how technology can be applied to create new revenue opportunities, fix problems or facilitate the business. It can help your company, your IT organization, and it may even increase your career potential, as a unique individual who can meld the technical with the business. Understanding the business is the first step that IT organizations must take in order to transform themselves into real-time or on-demand enterprises.