The concept of IT as a money-maker is counterintuitive to many. But that’s exactly what makes it appealing in a world of business models turned on their heads by digital disruption.
“The goal is not just disrupting the old ways of doing business, but leveraging the amazing boost in performance that comes from swapping out the old infrastructure and cutting over to the new,” the author Geoffrey Moore once told an interviewer.
Moore is the author of the legendary 1991 book Crossing the Chasm, a guide to taking new technologies from innovators to mass markets. Today, he said, the marginal IT costs of many business activities are near zero, leading to a sterling opportunity. Automating customer transactions, adding more computing power, adding resources to a sharing economy, even optimizing the system through data-driven decisions are all ways to derive revenue from activities which scale cheaply.
Moore’s recent book, Zone to Win, presents this idea in a chart which plots the paths from investment to revenue on one axis, and disruption to sustainability on the other. Three of the four are immediately recognizable to most executives.
Performance is the core money-making business in operation — anything that contributes to more than, say, 10 percent of total revenue.
Incubation is those areas that develop new products or explore new markets.
Productivity is where IT usually sits in execs’ mental landscapes. It’s like finance or building operations.
Moore advocates the creation of a fourth Transformation Zone, where disruptive innovations bring in revenue, rather than being sunk costs that one day could become profitable products and services. This is where IT has the potential to become a profit center.