How to turn a great IT idea into a commercial success

Entrepreneurial CIOs at Union Pacific, FedEx, and other companies tell how they’re transforming internal IT into revenue-generating products

Lynden Tennison is an entrepreneur. He runs several businesses, including one that sells workforce-management software and another that markets telecommunications bandwidth.

He's also the CIO at Union Pacific (UNP). Those software and services that Tennison markets? They grew from internal IT projects the $17 billion railroad company developed for in-house use and then decided to commercialize, bringing in $45 million to $60 million in revenue. "We looked around at things and thought, ‘Hey, we can make some money on that,'" says Tennison, who has worked at the railroad for more than 18 years, six as CIO.

Like a lemonade stand in summer, the idea to sell cool internal IT isn't new. The difference now is that there has never been a more hospitable climate for putting internal IT marvels on the market, says David Sovie, a managing director at Accenture (ACN). For one, developments such as cloud computing have decreased the cost of supplying IT products and services and expanded the geographic areas a startup venture can reach, lowering the hurdles to entering the IT market. Plus, the role of CIO has evolved to include big slices of business and strategic thinking. "Being CIO is not just about running the shop anymore, but the different ways you can help your business," says Tom Uva, CIO at Sensis, a private airline and defense services company that hopes to turn internal analytics software into a profitable venture. (For advice on turning a profit on internal IT, see "Does Your IT Idea Have Legs?")

But challenges abound, even for business-minded CIOs. You have to identify a likely market for the product, price it right, market it well and prepare to support customers who need hand-holding. You also have to honestly assess the ability of your IT group to become, essentially, a vendor. All the while, you must not drain money or staff from your company's core business, and you must continue to meet your company's internal IT responsibilities.

Even then, the twists and turns all companies navigate could crimp your plans to commercialize: Your IT creation may vie against other business ideas and lose. After all, Sovie says, "most companies aren't in business to create ideas to spin off."

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