It’s Business 101: A company exists to make money. So as a CIO, Ajay Sabhlok believes his mandate is “to figure out how to generate revenue for the company.”
Sabhlok, CIO and chief data officer of security technology vendor Rubrik, says he does that by searching for unmet needs, bottlenecks, and problem areas and then considering how technology can turn those around.
Case in point was the company’s lead-to-cash process. Data showed that the company wasn’t closing expected orders, which was showing up as lost revenue in quarterly reports, Sabhlok says.
So, he and his team identified and articulated the need for a more advanced opportunity management process — one that has an engine for more accurate scoring of business leads, automates manual tasks that were holding up orders, and delivers data-driven insights through user-friendly dashboards.
The efforts paid off: More leads converted to sales, and as a result, the company experiences a boost in quarterly revenue figures.
And all because IT saw a need and took the lead in co-creating with sales and marketing a solution aimed at generating revenue for the business. “Here we saw we were losing business and saw opportunities for improvement, and we brought that to the table as a way to improve revenue,” Sabhlok says.
Revenue generation: A new IT imperative
As Sabhlok’s experience shows, the CIO role continues to evolve. It has moved from focusing only on uptime and availability — the so-called “lights-on” function — and has even advanced past prioritising cost-cutting and efficiency gains.
Now the position is entrenched in the executive suite, where it is facing the requirement to partner with the business and strategise on how technology can transform its value prop to customers.
That’s evident in the 2022 Tech Trends survey from Info-Tech Research Group. The firm polled CIOs about their priorities and found that business process improvements, digital transformation or modernisation, and security were the top three. What came fourth? Supporting revenue growth.
“This is something that’s going to be expected, that the technology inside the organisation, regardless of the sector, will be expected to bring value in revenue or market valuation,” says Nicola Morini Bianzino, global CTO for professional services firm EY. “CIOs have to be a technology consultant and advisor. They can’t just run an efficient machine.”
Increasing expectations for top-line growth
The expectation for CIOs to contribute in delivering business revenue has been building over recent years, according to multiple sources, who note that retail CIOs paved the path, creating omni-channel experiences and tech-enabled features such as virtual try-on type capabilities, as did CIOs at companies whose business models were built completely on IT.
“IT was largely doing that work, and that’s clearly aligned with generating revenue,” says Karena Man, a technology consultant who leads the data practice and the West Coast Tech Officers practice at management consulting firm Egon Zehnder.
To be clear, this call for CIOs to directly boost revenue goes beyond delivering value — something CIOs are also increasingly expected to do.
To that end, CIOs are indeed partnering with their business unit colleagues and supporting enterprise strategy as well as calculating the value that IT provides on those fronts. And those efforts do, in fact, support the company’s ability to make money.
But those efforts are not always a straight line to increased sales, higher margins, and/or greater market share. The work done by most CIOs “still skews more toward the internal production of systems that support the business overall,” says Kim Villeneuve, co-founder of bluSPARC, a coaching and executive development company, and CEO of Centerstone Executive Search & Consulting.
Much of that work remains about efficiency gains and reduced friction — which, again, is important but not revenue-generating. It’s not surprising, then, that the ability for CIOs to operate in ways that specifically and directly grow revenue remains a tall order.
There are reasons for that, as being a revenue-generating CIO requires a different approach than that traditionally taken by the CIO, says Bobby Cameron, vice president and principal analyst with Forrester Research.
“It’s easy for more traditional IT shops to be preoccupied with being an order-taker,” he says, explaining that CIOs who want to impact revenue figures need to shift to “focusing on and measuring what the company is doing in terms of its financial performance.”
He adds: “That may sound obvious, but the maturity isn’t there; about 59 per cent of IT organisations don’t yet focus on business outcomes yet.”
Essential steps for CIOs to generate revenue
Cameron, CIO advisors, and revenue-generating CIOs point to several key elements that enable IT teams to specifically and directly boost the top line and not just improve bottom-line numbers.
1. Know business objectives and determine how IT can impact them
CIOs have been schooled to know the business, speak the language of the business, partner with the business. But Egon Zehnder’s Man advocates for an even more active engagement between IT and the business, so that IT can identify opportunities where technology can boost sales or improve margins.
“They’re more willing to engage in learning,” she explains. “There’s a genuine desire to make the lives of their customers better. And that’s what drives them to go out and engage with the buyers to learn about what’s missing.”
John Abel, senior vice president and CIO of tech company Extreme Networks, says he’s taking that approach. “Every business case we put through has to have a determined business outcome,” he says.
He’s not talking about traditional IT objectives such as improved operational efficiency or lowered costs but true business goals like improved customer satisfaction, customer engagement, and sales processes — “which all lead to increased revenue.”
Abel says he identifies those opportunities within the IT portfolio that “I think will deliver the most gains in revenue. And those are the ones we want to invest in, because our business strategy is growth.”
He uses customer-centric metrics to determine whether IT initiatives actually have a direct impact on revenue. If so, “those are the ones we bring forward.”
Abel points to his team’s work on the company’s web and digital presence, where IT had determined that existing technology created friction that limited sales growth. So he and his team identified and delivered capabilities, such as more advanced analytics, that would drive up more orders. That means, quite simply, more sales and more revenue.
Others echo this idea, saying CIOs need to focus on and actually co-own business outcomes.
Here, Cameron cites the importance of business capability mapping, a process for identifying and modelling or depicting what the business does to reach its objectives. Cameron says the CIO and the IT team can use this approach to identify how and where technology can be most impactful in the chain of capabilities that fall under business objectives.
To illustrate this idea, he points to a vision products company whose sales agents would schedule equipment demos for prospective customers (typically eye doctors).
The CIO used business capability mapping to understand all the capabilities — initial sales calls, the demos, follow-up conversations, and so on — that went into making a sale. This enabled the CIO to move past discussions of what systems supported the work to identifying what could change the actual business outcome itself — that is, the number of closed sales.
“The CIO can see and show where IT can impact the performance of that objective, and the CIO can track and report on that,” Cameron explains. “So if the objective is expanding sales in a particular state, the CIO can talk about what IT changes to make that happen.”
2. Adopt a product orientation
One key way to change business outcomes (and, thus, creating the ability for IT to help with revenue generation) is implementing a product-based approach in place of the traditional project-based structure of IT delivery, according to CIOs and executive advisors.
“A shift to a product-centric point of view means I’m not just worrying about the CRM, I’m actually worried about the flow of value creation,” Cameron explains.
Many CIOs are already shifting this way by adopting agile and DevOps software development methods, both of which centre around the notion of iterative product development and creating features and functions that meet needs.
That’s a start, but experts say CIOs need to get cross-functional product teams, led by skilled product managers, focused on meeting the targeted business outcomes and holding them accountable for delivering those outcomes.
Cameron says he has seen some companies implement bonuses for CIOs and even those within IT who can deliver revenue growth, which is an effective way to ensure product teams focus on the successful delivery of business outcomes.
3. Think and act like an entrepreneur
CIOs that do all this, Man explains, “think about their roles more expansively. They’re less willing to stay in their swim lanes. They think about their responsibilities a little differently. They see unmet needs. In a way, that’s no different than a founder of a start-up.”
That entrepreneurial spirit may come naturally to some, but Man and others says it’s also an approach that others can learn and put into practice. CIOs can more actively engage colleagues throughout the business, engage customers about their experiences, become product centric, reward innovation, enable ways to test ideas, and truly accept failures when they happen.
“It’s understanding where to stop and listen to what the business opportunities are,” Villeneuve says, adding that CIOs who do this well are empathetic, collaborative, nimble, and resilient — and they have practices and processes that support innovation.
Villeneuve says CIOs are often well positioned to be the entrepreneurs within the C-suite because they have a broad perspective of what’s happening across the enterprise — both functionally and geographically. They may, for example, be able to see that a technology, such as an app, is driving up revenue in one region and understand how to adopt that for another market.
“That makes them a solutions-based executive,” she adds.
Abel says he enables entrepreneurship and innovation in part by having his team do what he terms “ride-alongs.”
“They go through what a customer or business partner experience is, and we look at competitors and talk to our [company] partners about their experience with our competitors and ask, ‘What is the frustrating part with us versus a competitor,’” he says. “You need to talk to the people closest to driving the business outcome you’re seeking to achieve.”
That approach, however, may not fly in every organisation as currently structured, according to sources. Man says CIOs in organisations focused on using IT for efficiency gains likely have what it takes to become entrepreneurial, as they’re “very creative and resourceful in working effectively within a lean environment.”
But they may find if they don’t also work on changing colleague expectations that “they’re not going to be rewarded for being entrepreneurial.”
Consequently, CIOs who want to work in ways that drive up revenue must either help create an organisation where that would be welcome and rewarded — or find one where those approaches are already valued.
“Entrepreneurship is messy,” Man adds. “You have to work in an environment that encourages that and is OK with that, and not punitive for it.”