IS's Seven Levers of Growth

Growth remains the top priority for most business executives. In most enterprises, this means make more profits.

There are two ways to grow profits. You can cut costs, or you can grow revenue. Cutting costs has been a recurring theme for decades, and an all too frequent rationale for enterprises investing in IT. Reducing costs to become or remain competitive is a sensible strategy no matter what your business. Forecasting reduced cost is somehow less difficult and more believable than forecasting an increase in revenue, which makes business cases easier and everyone feel more secure about the outcome.

All this is a shame. Many wise business managers know to be true what the well-known aphorism says: "You can't cut your way to greatness." For sustainable growth, you need to look at the top of the income statement as well as the bottom. Think past cost and focus more on revenue opportunities.

Growing revenue, selling more, raising prices, or doing both, has always been a problem for IT. Conventional wisdom has it that IT is an obstacle to growth, not its enabler or driver. When new products are late, IT gets blamed because they couldn't make the changes to the systems needed to support them quick enough. Never mind the fact that no one thought to tell IT that these new products were coming.

When a price hike doesn't stick, IT gets blamed for all of the accumulated bad feeling from customers over poor service. Of course business managers aren't to blame. They were unaware of the situation because they lacked good management information, which was IT's fault. Further, why did the order taking people promise products that couldn't be delivered or the supply chain fail to deliver them on time in full? This had to be an IT problem, right?

Fortunately, as in so many instances, conventional wisdom is only partially right. Yes, there are examples when some technical fault costs sales. A recent example occurred during the early days of domestic ticket sales for the 2008 Beijing Olympics. The ticketing systems crashed due to unexpected transaction volume, costing, or at least delaying, sales. Yet these failures happen a lot less often than the person in the street is led to believe.

The real problem IT faces in relation to revenue growth is that most of its activities are at best only loosely connected with growth. Keeping the lights on, which is where most of the budget goes, is not creating tomorrow's bigger business. IT and the CIO can and do make much more of a contribution to revenue growth than is typically understood. All it takes is an appreciation of the specific levers of growth, and the wherewithal to do something with them.

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