IT has certainly become an essential part of each and every business. What initially started as a requirement for research computing has become a necessity for almost all business verticals. Today, business without IT cannot be imagined in many areas.

To discuss the subject of IT as profit center, let us consider two scenarios-In house IT departments and IT departments hived off as separate IT companies.

In house IT departments
This has been the general approach which large corporates and big time IT users in BFSI, manufacturing, healthcare, travel, hospitality etc have been following over the years. The responsibility to conceptualize, develop and implement solutions for these user organizations lies with their IT departments. Though the IT solution is for the organization, the IT department has been seen as a cost center, putting budgets under pressure. Under this scenario it would be interesting to see how an IT department can be presented as a profit center. Some thoughts:

C Kajwarkar CIO, NSE.IT

Develop Effective Business Case: To provide a solution to business unit, a CIO often goes through a phase of decision-making involving many dimensions:

• Make or buy

• Own or lease

• Develop IT solution as per existing business process or modify business process to suite available solutions

• Dedicated solutions to own need or shared solution

• Conduct the business process or outsource

CIOs invest significant time in optimizing the costs through various means (negotiations is one of the most favorite) but all said and done, it is seen as cost for the business. Therefore it is necessary for CIOs to learn how to bring out the 'business case' of IT investment in a more effective way.

If possible all the direct, indirect, tangible and intangible benefits should be converted in monetary terms and weighed against the investments. In most cases, IT solutions would bring lot of operational efficiency, reduced paper work, streamline procedures and improve customer satisfaction. These factors can be used to bring out intangible benefits.

Stay Flexible: Choice of solution, technology, even place could have impact on profitability of IT. Therefore stage of conceptualization is extremely important. A solution implemented today should give you flexibility.

IT departments as separate IT companies
In the last few years, there has been a change in the thinking of large IT user organizations. These organizations want to leverage their strengths as IT users in their respective domain areas by providing products and solutions to same or similar industry. There are global as well as domestic examples. It is indeed interesting to see this change.

These IT organizations generally have dual responsibility. They need to continue providing all IT services to their parent organization exactly like their previous role as 'in house' IT department and also develop market for themselves with healthy bottom line. The challenge of remaining profit center in such scenario is totally different. Such organizations should strive to make more business from external customers than parent organization.

A good SWOT analysis as IT department would give clarity of core strengths of the people in the organization. SWOT should not be limited only to domain knowledge, technical skills and count of people. Since the role of people would change from a 'customer' to 'service provider', factors such as customer orientation, responsiveness, etc also need to be considered. Ultimately in long run customers judge the organization as a package.

As told to Bhaswati Chakravorty 
bhaswatic@cybermedia.co.in

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