IT as a revenue center

The entrepreneurial spirit is alive and well in corporate IT. Here's how three IT organizations are making money for their companies -- and loving it

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Because no suitable off-the-shelf solutions were available, BT’s IT department initially tried to develop a rules-based scheduling system — which didn’t scale. It was a big, complex problem, recalls Sweeney, explaining that the system needed to determine “which tech did what work based on where they were, what skills they had, and what the customer needed done.”

Ultimately BT’s IT group partnered with R&D on developing a constraints-based software system based on operations research principles of cost and value modeling. “At its peak there were over 100 people building it. Many years of writing and testing went into it,” Sweeney says. By the late ’90s the system was fully deployed, saving the company money and accelerating the rollout of premium services.

Meanwhile, IT head Stewart Davis had created an incubator called BrightStar to try to take some of BT’s IT-originated innovation to the market and get external venture funding — a tradition that BT’s current director of research and venturing Mike Carr says continues today. “Vidus has been a fantastic success,” Carr says. “BT’s core business is IT — if we’re not creating a company that can be venture-funded every year, we’re not working hard enough.”

The field service application, plus 100 people, was spun out of BT as Vidus in 2003, in partnership with New Venture Partners, a venture capital firm specializing in corporate technology spinouts. “We thought what we’d done was applicable to any large field services organization,” Sweeney says. And, in addition to marquis customer BT, the company picked up a string of large accounts including cable, utility, and telecom customers in Europe (NTL, British Gas, and E.ON) plus Cincinnati Bell in the United States.

Although the total financial return to BT from the Vidus spinout is hard to determine, Sweeney isn’t shy about offering advice for would-be IT entrepreneurs. First, develop a close working relationship with your R&D counterparts, he says, and “set up a structure that enables the transfer of ideas and IP both upstream and downstream.”

Second, never underestimate the value of the innovation you have. “From within an IT organization looking outward, there are a lot of unknowns,” Sweeney says. “It’s a scary world out there. Just ignore that and keep faith in the innovation you’ve got — and that you’ll be able to monetize.” Getting people with sales and marketing skills involved early on is also crucial, as is convincing people within IT to make the leap to a potentially riskier startup project.

“In the end, it comes down to a personal choice, a risk/reward decision,” Sweeney says. “If you’re gonna have a great day, you’ve got to challenge yourself, put some risk into your day. It’s as good a time to do it now as ever.”

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