Leadership

Capitalize on your customizations

Don't let one-off customizations be the bane of your existence. If approached from these, angles, they can generate measurable financial returns.

One of the banes of anyone in IT management's existence is one-off customizations. They tend to get "snuck in" through a sales contract or are a minor change request that gradually morphs into a unique process or even a customized system. For example, I once worked with a company with a large call center operation that would sell commodity supplies to business customers. They developed a series of databases and warning screens that would display information to a sales rep that could range from "Don't sell any of the Series 9000 products to Joe," to "Tim requires faxed approval from his manager Mary for any purchase above $1,000."

These customizations end up being money and time sinks for IT; however, they can generate measurable financial returns if approached from two different angles. In the first instance, these customizations should be tracked for cost and time required to implement and maintain, and they should be measured against the sales that particular customer generates. Too often, in companies where compensation depends on the performance of a unique fiefdom, there is subtle encouragement to "pass the buck" to another business unit or function, and IT is just as good a recipient as any other.

Sales might happily cash the checks on a $100,000 deal amid accolades and high fives, while IT spends $150,000 on customizations and enhancements to support customer-specific customizations. While these requirements may still be valid, understanding the full costs of a deal may not only reduce the occurrence of the more esoteric proposals but also bring IT into the sales process earlier rather than having them on the receiving end long after the deal is done when terms can no longer be negotiated.

In addition to more closely tracking and managing costs of customizations, you can also use them as a source of revenue. In the example above, I advised the client to charge for what amounted to a purchasing management system. Customers clearly saw the ability to have their supplier help manage their purchasing process as valuable service, and many of them were more than willing to pay for what had previously been given away for free.

As a large-scale example, consider the granddaddy of selling internal customizations: American Airlines Sabre reservation system. Developed as an attempt to automate an increasing number of airline bookings in the 1960s, the system was eventually rolled out to other airlines and spun off into its own company, which now serves as the backend for most of the world's travel providers and booking agencies. While you may not be sitting on the next Sabre, there are likely myriad opportunities to capitalize on technical and process customizations that you are currently providing for free.

Some of the best places to start looking for saleable customizations are those closest to your customer: customer contact centers and your logistics and supply chain operations. Look at all the internal information and tracking you maintain about your inventory and seek opportunities where you can sell the information you are already gathering for internal use. On the supply chain side I have seen clients using their logistical heft and excess capacity to manage customer inventory around the globe finally realize that this was a compelling service that could be generating revenue, rather than serving as a headache. In another case, a company's IT department developed heavy talent around supply chain issues in their industry and actually sent IT staff to customer locations to provide consulting.

The biggest problem with identifying these opportunities is that they become gradually built over a number of years, and those most familiar with them have often lost sight of what is impactful to the customer and what facilitates internal processes. Consider bringing in someone from another business unit or some outside expertise to look at a system or process area and help identify where these saleable processes might lie. A small internal task force or annual consulting effort that finds two or three of these processes and then works with marketing and sales to turn them into a viable product easily pays for itself and wins accolades for IT far beyond the relatively thankless job of maintaining and enhancing the company's technical infrastructure.

We have all heard the tired debate about whether IT should be a profit or cost center, and many suggest convoluted schemes of charge backs and internal billings to "fake" IT into generating revenue. Rather than focusing on accounting antics, take that energy and apply it to finding high-value, saleable tools inside your existing infrastructure. Doing so makes the profit/cost center argument a moot point, when checks for IT's services from "real" external customers land in the corporate bank account.

Patrick Gray is the founder and president of Prevoyance Group and author of Breakthrough IT: Supercharging Organizational Value through Technology. Prevoyance Group provides strategy consulting services to Fortune 500 and 1000 companies. Patrick can be reached at patrick.gray@prevoyancegroup.com, and you can follow his blog at www.itbswatch.com.

About

Patrick Gray works for a global Fortune 500 consulting and IT services company and is the author of Breakthrough IT: Supercharging Organizational Value through Technology as well as the companion e-book The Breakthrough CIO's Companion. He has spent ...

2 comments
aharper
aharper

If you are a sales centric organization, IT is considered the petulant naysayers who are on the overhead side of the equation. Never mind the fact that they have been warning the sales team of a $150,000 cost to their $100,000 enhancement. When it fails, it will be IT's fault since sales has moved on to the next client. If you are a tech centric organization, the sales guy will look to the assembled tech team for nods and shakes of the head during the negotiation process. This yields an unsure salesman and a product which has limited innovation. It probably meets the client's basic needs, but none of the wants. The good news is that the programmers stay well within their comfort zone, even if the client is less than thrilled. (sarcasm) Neither is the solution, as both types of organizations have the same problem. A division between sales and IT will yield a salesman who has little knowledge of what he is selling, therefore it should come as no surprise when he sells unobtanium. Likewise, the techie in a segregated organization won't leave the office much. He has little to no face time with the client, and certainly won't understand his vision. The solution is as simple as it is rare. Team these people and departments up. Yes, you heard right... put your best salesman and IT generalist in the same room. Despite their objections, there is much each can learn from the other, and proximity will make this happen. After the initial friction, the sales and IT teams will bond. Once this happens, the team will come up with cutting edge marketable solutions that closely meet the customers needs and wants. The point is that the center of the organization must be its management team. Neither sales nor IT should have the upper hand since the short path to each department's goals are mutually exclusive of the others.

pgray
pgray

That was one of the most salient, relevant and thoughtful replies I've ever had to one of my TR articles, and essentially the point of much of what I write. Thanks for posting! Warm Rgds, Pat Gray