Transforming IT from Cost Center to Innovation Hub

As any IT manager knows by now, the mantra coming down from corporate is “cut, cut, cut.” The economy may be better than it was a couple of years back, but companies are still putting the budget squeeze on IT. Is it time for fresh thinking?

Michelle Bailey of 451 Research, recently pointed out that enterprises are still withholding incentives from their IT departments to grow and innovate. “During the last several years, most of the ‘successful’ projects in IT have been cost-cutting and consolidation and, frankly, there has been little incentive for CIOs to drive innovation given the emphasis on cost-cutting,” she says.

The challenge is, if you are an IT manager or executive, how do you shift this perception among business leaders that your department is more than a cost center? Bailey provides some advice:

Learn to sell innovation to the business. This takes presentation skills, as well as some business savvy. As Bailey puts it: “we need real leaders who will go to their boss and say, ‘here are five projects that will not save money, but they will drive business value.’” At the same time, don't minimize the value of technology in transforming the business, she advises.

Use metrics to measure business value, not just costs. “IT probably does the worst job of any business unit in terms of measuring itself,” says Bailey. Metrics that can call out IT's role in expanding the business include business availability, time to market, application deployment and security. CIOs need to think more about risk and reward, not just costs, she adds.

Create a five-year plan. IT leaders need to think longer-term, and consider the business environment around them, says Bailey. “If I was a CIO I’d worry about things like ‘Do I have a credible strategy that is aligned with business investments? Is it realistic for the next three to five years? Who are my competitors?’ I’d be worried about new competitors blowing right by me and I don’t even know it.” The greatest threats to an established insurer, in fact, may come from upstarts with minimal IT investments and are willing to promote new types of products. IT can help prepare for such competitive threats.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

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