Traditional IT has been lumped into the corporate cost center bucket—expenditures that are necessary but not especially connected with marketplace success. In other words, that bucket holds everything not focused on building and selling a company’s products or services. Every company’s approach to cost centers is the same: spend as little as possible.
However, this will change significantly as more of every IT organization’s efforts focus on digital-first applications. This is because these applications directly interact with customers or improve products to make them more attractive to the market. They are directly tied to revenue and, because of that, are subject to very different spend filters.
The question asked of digital-first applications is not “How much will it cost?” but “How much will it make?” For those applications that show a positive contribution to revenue or profit, the issue will be how much can be invested and how quickly.
This changes the role of IT, which can be summarized in the phrase “IT’s job changes from supporting the business to running the business.”
For senior IT leadership, this imposes a range of necessary actions:
Closer collaboration with product teams to ensure the right digital functionality is built into the company’s offerings.
Better analysis of how users actually use the product, so it can be modified to increase customer engagement and thereby revenues.
Increased emphasis on application resilience to reduce interruptions to revenue flow.
Essentially, IT must change from an order-taking organization to a collaboration partner organization. Some leaders and organizations will make this transition, and their parent companies will thrive; others will find the change too challenging, and their failure will affect not just them but will damage their parent company’s future.