Backed by a cadre of data analysts, many of whom sport doctorate degrees, Lee looks across product groups to see what data can be mined and exploited. Here are just two of the revenue-generating projects her IT department generated:
- Data from Intuit Online Payroll is used to produce the company's Small Business Employment Index. What's more, some of the same payroll data can be used yet again by employees of those firms when they file their taxes using TurboTax.
- Data from QuickBooks online is aggregated, made anonymous, and melded into a feature that lets small businesses compare their critical metrics, such as margins and days payable, to those of competitors. Because the data is so granular, customers can drill down to compare themselves to businesses within a particular vertical and a particular geographical area.
Lee is hardly the only CIO chanting the mantra of monetization. "We're calling this the era of the moneymaking CIO," says Gartner analyst Ken McGee. McGee recounts a recent conversation he had with Terry Kline, the CIO of General Motors. When asked his top priority, Kline did not talk about security or network efficiency. "My top priority is helping GM sell cars," he told the analyst.
For IT to build business, it must first build a new relationship with the business units. Tata Consultancy Service, for example, guides clients to make CIOs a part of the company's core management group. One customer has added a business relationship manager to work in IT to bridge the gap between the techies and the business groups, says Harcharan Sing Rajpal, head of Tata's IT application services for North America.
Within five years, that kind of cooperation won't be optional, and McGee predicts that by 2016 compensation for IT mangers in Global 200 companies will be based, at least in part, on the amount of revenue driven by their departments.
The new IT in action: Applying analytics
It's not coincidental that IBM, Oracle, SAP, and Microsoft have all made massive investments in BI, or business analytics, in the last few years, largely through a series of billion-dollar acquisitions. Oracle bought Hyperion for $3.3 billion; SAP acquired Business Objects for $6.8 billion; IBM bought Cognos for $4.9 billion in 2007, paid $1.2 billion for SPSS in 2009, and plunked down $1.7 billion for Netezza in September.
IBM, for one, is projecting is projecting $16 billion in business analytics and optimization revenue by 2015. To see why Big Blue is so bullish on the sector, consider Infinity Property and Casualty, or IPACC, a supplier of auto insurance with a network of more than 12,000 independent agents and revenue close to $1 billion. Large as it is, once IPACC weathered the worst of the recession, the company realized that it had to find significant efficiencies in the claims process, says senior vice president William Dibble.
A cornerstone of the cost-cutting effort is the use of new technologies, ranging from the simplicity of a cell phone camera to the complexity of advanced analytics software. Instead of sending an agent to take pictures of damaged autos, IPACC encourages its customers to photograph the wreck themselves, saving money and time.
Much more complex, though, is the task of quickly deciding which claims are probably not the fault of its policyholders. "We want to go after the low-hanging fruit first," says Dibble. With the help of IBM software, IPACC developed an analytics application that sorts through incoming claims, looking for keywords and phrases like "parked" or "garage." Claims with phrases that indicate the customer probably wasn't at fault are fast-tracked, freeing up adjusters to deal with more complex cases.