Harnessing IT Creativity

After 2001, every IT cost was under attack, even R&D. Casualties included the best minds in the department. "I met one CIO who basically got rid of all those people who were creative and helpful," says Orlov. "IT R&D departments typically only remain in the most partner-player IT organizations, where IT is tightly integrated with customer strategy. A lot of that emerging technology research within IT went away." But new technology can be the key to competitive advantage, and therefore, revenue growth.

At YRC Worldwide, however, there's a growing emphasis on IT R&D. When CIO Rapken joined the company last year, he doubled the size of its R&D group. The group watches trends and conducts trials on everything from GPS to RFID to determine which hold the most promise for the trucking business. "I didn't feel we had enough people to keep up with the ideas that the business wanted help evaluating," Rapken explains. "By investing more resources we'll get a greater return on innovation. When people see this, they believe you are serious and are more willing to contribute ideas."

That's a big step, says Orlov. "You have to create an idea-generating framework and a good process to go with it to make sure great ideas for generating revenue are acknowledged and incented and sponsored at the top," she says. "There are creative people and good ideas in IT. You just have to figure out how to tap them."

By reintroducing R&D, YRC's IT projects are now weighted about 70 percent toward cutting costs as the company digests recent acquisitions and 30 percent toward enabling revenue growth. Getting projects in the latter category funded can sometimes be a challenge. "It's difficult to create a business case for some projects because they're scrutinized by finance people who want tangible benefits," Rapken explains. "It's easier to quantify that on the cost-cutting side."

One strategy for success is to make the $US8.7 billion company and its systems easier to do business with, says Rapken. This not only tends to increase revenue but provides the cost-cutting benefit as well. "By improving processes, you make yourselves more attractive to customers and grow revenue," says George Westerman, a research scientist at CISR.

One such initiative is YRC's Web-based customer service system in its Roadway Express division. The customer service department comprised three separate groups. They all used the same system but each worked with its own set of screens and programs. Between them they used more than 60 screens, many with identical functions. IT realized the department could be more productive if the screens were streamlined into a single browser-based system that eliminated duplication and was more user-friendly. Indeed, after spending $US1.8 million on the corporate sales centre application, the company's call centre reps were able to increase outbound calls, cross-sell other YRC services and close more sales. Roadway Express revenue shot up an average of 20 percent over a two-year period in five product areas.

What if you don't have the luxury of a separate R&D group? Make creative thinking part of everyone's job, says Ball State's Smitherman. "Looking for innovation is a key day-to-day task," he says.

Smitherman also relies on the draw of leading-edge work - such as the wireless initiative - to inspire active participation by staff. "IT stepped up and they did this as overload work," he explains. "People were willing to go beyond the demands of their jobs because of the excitement of it."

To give his staff more time to explore the moneymaking possibilities of the wireless project, Smitherman also used some of the government grants to hire additional workers for it. "We're stretched very thin and asked to do more with less every year," he says. "This gave us that first edge to enable us to innovate."

Closer to the Mission and the Customer

An important step to making IT a contributor to the top line is getting closer to the customer at the end of the line. At Discover Financial Services, that's a no-brainer. Technology is the business for the $US3.5 billion credit card company, and the IT department partners with its various functions. "IT is not any different than the call centre guy," says Discover CIO Diane Offereins. "Everyone is focused on how our work impacts the business because our product is delivered by technology."

Offereins has a robust R&D group within IT that analyzes the business opportunities presented by new customer-facing products enabled by technology, such as mobile phone wallets and teen or family cards, and a new project forum that "positions us well for new revenue-generating opportunities", she says.

One of the company's top priorities is to pursue new growth opportunities in emerging international markets. IT's close alignment with that mission enabled an alliance with China UnionPay to proceed quickly. IT teams throughout Discover, including the Pulse, security and engineering departments, worked cooperatively with their respective business customers on the project from day one. At each step, IT was there to "make sure we're able to capitalize on opportunities like this", says Offereins. "It's different from what goes on in the product development group where you're testing all kinds of different things and taking them to market."

The long-term agreement signed last May will lead to the acceptance of Discover Network brand cards at UnionPay ATMs and point-of-sale terminals in China and acceptance of China UnionPay debit cards (920 million and growing) on Discover's Pulse network in the United States. The network will be fully operational by the end of the year, making Discover the most widely accepted US credit card in China.