There are those CIOs who seek to align IT with the business. Then there are those who make IT an inextricable part of the business by creating or fostering projects that become vital revenue generators.
Innovators at a glance
The company: Trek Bicycle Corp.
The revenue generator: Ascend, a point-of-sale software system for bicycle vendors
Project origin: CEO roundtable discussions of business pain points
The outcome: 800 bicycle vendors in the U.S., U.K. and Germany use the software
What's next: Seeking to scale globally
Words of wisdom: "If you're not failing, you're not trying hard enough." -- Brent Leland
The company: Sears Holdings Corp.
The revenue generator: MetaScale LLC, a Sears subsidiary that sells subscription services to manage large data sets using Hadoop, as well as consultation services for managing big data
Project origin: skunkworks
The outcome: A company that meets a mostly unmet need in the marketplace
What's next: Continued work on MetaScale, which is just over a year old
Words of wisdom: "I don't try to do anything unforgiveable, but I'm more than happy to take the risk and ask for forgiveness afterward." -- Phil Shelley
The company: CUNA Mutual Group
The revenue generator: Smartphone Loans, a mobile application that lets credit union customers compare care loan rates on the spot
Project origin: skunkworks
The outcome: The mobile app has generated millions of dollars in revenue
What's next: Creating an innovation "incubator" to get organized around finding the next big ideas
Words of wisdom: "Be realistic about risk -- if you're going to take a big risk, you've got to have big air cover." -- Rick Roy
The days of CIOs being strictly technologists are long over. And while revenue generation may not be explicitly stated in the job description for CIOs, IT departments are increasingly being looked at as centers of moneymaking innovation.
Phil Shelley, Rick Roy and Brent Leland are three examples of IT leaders who have taken the extra steps -- and put in the extra hours -- to foster innovations that have made their IT organizations indispensable sources of revenue generation for their enterprises. The fruits of their labor include the following, respectively:
- A startup company
- A multimillion dollar mobile app
- An industry-favored software system
Just don't expect them to toot their horns about being revenue rainmakers. Shelley, chief technology officer of Downers Grove, Ill.-based Sears Holdings Corp., doesn't regard this role as anything particularly new for an organization that is in charge of technology for the enterprise.
"We're expected to innovate," Shelley said. "And that fact actually helps CIOs nurture new ideas much more easily; it also helps us allocate people and money devoted to [those ideas]."
The responsibility to help build the business through revenue generation or other means also makes sense to Roy, CIO of Madison, Wis.-based CUNA Mutual Group. The CIO, as it's long been said, has one of the few company seats with a vantage point that looks across the enterprise, sees the pain points and knows where the disruptions might be.
Leland, the now-former CIO of Waterloo, Wis.-based Trek Bicycle Corp., put it this way: "In a lot of ways, we can see the needs of the outside customer better than the outside vendors."
At this year's Fusion CEO/CIO Symposium in Madison, Wis., each of these leaders shared the story of how he got started, his success and what he hopes happens next.
Uncharted big data territory ripe for revenue generation
What started out as "an evening job" for Sears Holdings' Shelley has taken the shape of an entirely new company: MetaScale LLC. For months, Shelley and members of Sears' IT organization labored under the radar in a skunkworks scenario, leveraging Hadoop to manage large data sets. When word of their work got out and garnered some press coverage, other companies began to take notice.
"People from other companies were saying, 'Can we come and see what you do?' and we said yes," Shelley said. "We did that on a voluntary basis for quite a while."
But when companies began saying they lacked Hadoop expertise and asked for Shelley's help with such things as integrating with mainframes, a line was drawn -- and an opportunity presented itself. Unlike Shelley's group at Sears, none of the big data vendors in the market was offering much beyond basic support, leaving serious gaps in areas such as PCI audits.
"So, we formed a subsidiary," Shelley said. "We leverage the Sears knowledge to deliver services with a small skeleton crew of dedicated and highly skilled people."
MetaScale is now only about a year old, but one sign of its success is the reaction from competitors in the big data space. MetaScale has become "a poaching ground" for talent, Shelley said.
"The big-brand companies have taken some good people from us already, but we've actually taken people from them too," Shelley said.
Mobile app taps customer needs
CUNA Mutual Group CIO Roy describes the origins of his company's highly successful car loan mobile app, Smartphone Loans, as a classic example of the power of skunkworks. Some members of his IT team were sitting around a table talking about ways to add value for customers. From ideation to initial creation, they worked on the app concept on their own, bringing it to Roy when they got to the point of needing monetary support.
"It was completely unencumbered by all the myriad processes we, like most big companies, have, which is probably why it was successful," Roy said. When he saw what they'd done, he was glad to oblige with funding. "I said, 'Absolutely, keep going' -- by the time it hit my office, it was a no-brainer."
Roy, along with many of CUNA's top leaders, has a background in software and services, experience. That came in very handy in guiding the project at the right pace.
"What it takes to take a product to market, distribution and channels -- those aren't trivial things when you have a large customer base," Roy said. "Our backgrounds helped us not dive in headfirst too fast without making sure this was a pool we wanted to swim in."
While Roy wasn't directly involved in the product's origin, he's now spending a good deal of time "on the follow through," talking with customers about how they can leverage the app's capabilities.
"What's been great about that is it's providing a very interesting entrez into conversations about other products and services we have to offer our customers," Roy said.
Software system meets unique industry needs
At Trek, the major IT innovation and revenue generator also was born around a table, but it was well within sight of the company's top brass. CEO John Burke made it a practice to hold roundtable discussions to talk about the biggest issues facing the business. One issue that emerged was the lack of a good point of sale (POS) system for Trek's channel partners to use in their bicycle shops. To solve that problem, the Trek IT department licensed technology created by a local startup and made it their own, a software system they dubbed Ascend.
Ascend, however, didn't become a real revenue generator until Leland arrived at Trek a couple of years after its launch. At that time, the software functioned as an internal tool maintained and ministered to by IT, rather than the business entity it needed to be. But with executive guidance and some new people recruited from the software industry, things turned around.
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"It wasn't until we ran it like a software company that we made it work," Leland said. "It took a lot of benchmarking and research to figure that out."
The hard work was worth it. Ascend belongs to IT but is structured as its own business, complete with a sales and marketing team. The software is in 800 stores in the U.S., U.K. and Germany. They're in the midst of going global.
"Our mantra at Trek is 'Don't do it unless it's going to be wildly successful,'" Leland said.
Let us know what you think about the story; email Karen Goulart, Features Writer.
This was first published in April 2013