Computerworld
Making IT a profit centre
Michael Hugos  31 May, 2004 14:44

It's great to use IT to cut costs, but people expect that. How can IT be used to increase your company's revenue? How can IT be used to differentiate your company from similar ones? How can IT be used to better please the people your organization serves?

Think about this: how can you employ IT to enhance the value of your company's products or services by adding additional features that your customers will value? Let me illustrate the idea. I work for a company that sells basic commodity products: food service disposables such as paper cups, napkins and plastic spoons, and cleaning supplies such as mops, floor wax and paper towels. Our customers can buy these things from many suppliers. One of the main reasons they buy from us is that we use IT to significantly increase the value of the products we sell.

When customers buy from us, they get a customized package of value-added services that fit their specific operating needs. They can order using our Web-based order entry system or their EDI systems. They can use XML or FTP. Or they can phone or fax us. They get daily updated sales history reports through our Web site that show their usage of our products at each of their locations, by supplier, product and volume over any time period, from one day to three years. To invoice customers, we can send them electronic invoices or statements in any format they need in order to automatically import them into their accounts payable systems. We format and preprocess the invoices or statements to insert whatever special general ledger codes or other data their accounting systems may require.

All of these services enhance the value of our products. We work with customers to enable them to control who in their company orders our products and which products they can order. We then provide them with sales information that lets them do a much better job of planning and budgeting their purchases and monitoring daily usage of our products. We help them streamline their back-office accounting procedures. We even provide customers with weekly or monthly report cards that track our performance against certain agreed-upon key performance indicators.

These services enable us to provide tangible proof that we do indeed lower customers' overall costs. And all of these services required IT in order to become a reality.

Because of these services, we don't have to compete on price alone. Our prices need to be close to those of our competitors, but we don't need the lowest prices to win new business. In this way, IT delivers part of all the products we sell. IT helps my company actively manage its profit margins.

Try this: write up a description of the value-added services your existing IT infrastructure can add to the products or services your organization provides to its customers. Work with managers in your sales department to educate salespeople about these value-added services and train them in how to spot opportunities to sell these services to customers. When salespeople ask you to come out and meet customers and help them win new business, you will know that you have succeeded in jump-starting your career. Through helping your company add new value to its products, you have added new value to yourself. And, unlike my company's paper cups, you're no longer a commodity.

Michael Hugos is CIO at Network Services Co, and author of Essentials of Supply Chain Management (John Wiley & Sons, 2003)

Computerworld Buyer's Guide - Vendors Matched to this Article

Comments

Post new comment

Login or register to link comments to your user profile, or you may also post a comment without being logged in.
The content of this field is kept private and will not be shown publicly.
Enter the fully qualified URL, eg. http://www.example.com/
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

More information about formatting options

Add to Google
Computerworld Buyer's Guide - Vendors Matched to this Article
Zones
Zone logoZones provide focussed content from Computerworld and leading technology partners.
Newsletter Subscription
Newsletter Subscription
Sign up for our Computerworld newsletters!
Syndicate content
 

Computerworld Webinar

Thursday, June 11th, 2009
10:30am EST (Sydney, Australia)
Screening at your PC

Computerworld is hosting a 30 minute live webinar to help you to learn how unified communications can save you money, foster innovation and business agility by making it easier for people to find, reach and collaborate with one another.

Register Now

Whitepaper

Data Centre Assessments: The First Step to Optimisation

A well-designed and executed assessment supports the ability to respond to a change in the business environment. Help make good management decisions by knowing what you have, what it can and can’t do, and where investment gives the greatest returns. Read on.

Enterprise IT Buyer's Guide
Find Technology Vendors Fast
 
Find vendors by name | Find by category
Sponsored Links
 
Send Us E-mail | Privacy Policy
Features List | Media Kit | Advertising | Contact Us

Copyright 2009 IDG Communications. ABN 14 001 592 650. All rights reserved.
Reproduction in whole or in part in any form or medium without express written permission of IDG Communications is prohibited.