Wednesday, September 06, 2006

IT Innovation: The Nexus of Processes and Technology

For many organizations, technology is a necessary cost that sometimes provides a return on investment in the form of saved time, energy or resources. However, enterprising CIOs are changing that by focusing on how IT can generate revenue as well as decrease costs. Like any other department, IT must contribute not only to operational processes, but also by generating revenue (see Overby, 2006 for more on this ever-pressing need). To do that, idea generation and innovation processes must become entrenched in the IT department. Luckily, as Overby puts it, "IT is the gatekeeper of data across the enterprise and understands business processes intimately," and as technology becomes ever more embedded in business processes, IT is admirably well situated to seize the moment for innovative revenue generation. But as Overby (2006) points out, just like any other department, IT must interact with customers to understand customer needs. The organization mission must infiltrate and motivate IT as much as it does R&D or marketing.

Washington Mutual's organization-wide focus on innovation includes the IT department. In an interview with Deb Horvath, CIO of Washington Mutual, she told us that all executives are evaluated monthly on measures including revenue-generation and innovative ideas for services, processes or products. Using the same process as in the rest of the organization, Washington Mutual focused IT on revenue-generating innovation by setting goals and objectives. As CIO Horvath put it:
"In February I had 13% [of all projects] focused on revenue-generating, now 25% are focused and working actively on revenue-generating programs. IT's one of those things, you can manage what you measure and we decided we could measure focus on revenue-generated opportunities…We stated a goal to increase the percentage of revenue- generating projects..."

Overby, S. (2006) "Money: That's What They Want." CIO, August 15. Available:

No comments: