The CIO's next big challenge: Making money, not spending it

CIO strategies: Tech leaders have to support how their business generates revenues and profits if they are to be taken seriously.

CIO vs CFO: Who is responsible for IT spending? CIO strategy: If you want to be responsible for digital transformation, then you need to stop focusing on operations and act more like a trusted business advisor.

The best CIOs have moved beyond just operational IT concerns and now spend most of their time thinking about how they can help their company to make bigger profits. That's a big change for an executive who has traditionally been tasked with spending money, not making it.

"Follow the money might be an old phrase but it's a great summary for what all CIOs should be doing now," says Albert Ellis, chief executive at recruitment specialist Harvey Nash, whose annual IT leadership survey for 2019 with consultant KPMG reports that 76% of CEOs want their technology projects to 'make' rather than 'save' money.

Ellis says CIOs need to understand how the business acquires its customers and revenues, and how it uses that acquisition process to generate profits and growth. He says CIOs who are on top of that relationship will be "absolutely aligned with the CEO", particularly if they can support new business models and new ways of working.

"If you do that, then you'll get a seat at the top table," says Ellis. "You need to understand, not only the regulatory environment, but also the drivers for investment. Always focus on the potential revenues and returns for the business."

So, how are CIOs focusing on making money for the CEO? Three IT leaders give their best-practice tips on generating profits for the boss.

Focus on how to develop new business models

Richard Gifford, CIO at logistics firm Wincanton, is currently exploring how robotic process automation can be used to help his firm reduce its operational cost bases. But while cutting costs can play a crucial role, Gifford believes the best way that CIOs can help their bosses is by helping the top execs to develop new business models.

"All of that work clearly has to align with the CEO's objectives," he says. "CIOs are looking in the marketplace for new opportunities, such that we end up having a conversation with the CEO and other leaders of the business about the art of the possible."

At Wincanton, Gifford envisages a situation where he uses emerging technologies, such as the Internet of Things and blockchain, to track and trace the firm's resources and to make spare capacity available to customers. The firm is already making moves in this direction. It's oneVASTwarehouse.com platform matches buyers with sellers of warehouse space.

"Identifying new business models, I think, is probably where it's at when it comes to making big money. So at Wincanton, we run a low-margin business. We could carry on operating as we are, or we could start to adopt new web platforms – and the margin there is significantly more than the margins we operate on today," he says.

The research suggests Gifford's approach could be on the money, especially when it comes to the expectations of senior stakeholders. Harvey Nash and KPMG's annual CIO report says the number one issue that the board wants digital leaders to address is the development of new products and services. 

Identify the biggest challenges in your organisation

Michael Ibbitson, CIO at Dubai Airports, says CIOs should go and spend time working in the various parts of the business to understand the key challenges of their colleagues.

"That's how you can best provide support," he says. "When I started here in Dubai, I spent the first three months doing shifts in our operation. I worked in the control centre one night and I worked on the security line on another night. I also worked in immigration one night, guiding people through the smart gates."

SEE: Using cloud, big data and biometrics to build the airport of the future

Ibbitson says he did those things because he wanted to find out in detail what was happening in the airport. He then returned to his department, documented his findings and started to figure out where the problems were in the business that needed solving through technology.

"That's how you help your CEO – you go and find out what are the biggest challenges by going and being part of the business," says Ibbitson. "And then you go and solve them for them. And in my opinion, that will eventually lead to the technology function, or the technology leadership team, taking an ever greater role in the business."

Use information to create a more efficient operation

Brian Shield, vice president for IT at Boston Red Sox, says he thinks of creating value for the business as being based around three supplementary questions: how do you drive revenue, how do you further reduce expenses, and how do you improve employee productivity?

"In my mind, those are probably the three most effective ways that we can create benefits for our business, at least financially. In our case, I think it's really about spending time to understand how your employees work. I think sports historically has simply thrown labour at problems and now we're looking at more efficient ways that we can use our people," he says.

SEE: Digital transformation: A CXO's guide (ZDNet special report) | Download the report as a PDF (TechRepublic)

Shield says "tremendous volumes" of data are collected by every Major League Baseball franchise. He says smart CIOs use emerging technologies to help generate new business opportunities for CEOs. It's his team's role to turn technology and data into a competitive advantage for the Red Sox in areas such as customer experience and operational efficiency.

"We're using things like the Internet of Things to understand the flow of people through various portions of the ballpark. We can then use that information to understand staffing levels. So, there are a lot of things that we can learn through technology that helps us to run a more efficient business for the CEO," he says.