Blog: Dan E. Linstedt

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IT: Changing from Cost Center to Profit Center

For too long I've heard over and over and over again how IT is this, IT is that - ok, true to some degree (for whatever is meant by this and that). But I've also heard how IT (specifically data warehousing groups, enterprise integration groups, SOA groups, web-services groups, etc...) are in fact cost centers. I'm here to share with you a true story about turning a data warehousing project in IT from a cost center to a profit center.

Here's a small part of how we did it, and what happened when we did.

I've been blogging about accountability of information, the change in the notions of what a warehouse means to people in the industry, the impacts of auditability and accountability. This particular entry builds on all of those concepts. In order to have a profit center in IT it is imperative that

a: the warehouse never be wrong (it becomes a statement-of-fact rather than a version-of-the-truth),
b: the marts can be produced in about an hour from seeing the requirements page,
c: the queries, login's and utilization are tracked across the enterprise,
d: the amount of disk space needed for the new marts be justified by the business unit requesting the information.
e: the initial business user (who funded the first build out) not only helps with the inside marketing, but also provides the business requirements needed to track other business units across the enterprise.

Value, value, value to the enterprise, it's like "location-location-location" in real-estate. Our job is to build a bullet proof system that passes audits, and actually begins to pass as a system-of-integrated-record for the enterprise.

Ok, enough of that, how do I turn my IT "project" from a cost-center into a profit center?
There are many many steps, I'll present the first couple here - and if you're interested in discussing it, please post your comments.
1. Bullet proof data, it records what was stated, when it arrived, and what it looked like when it got there. There are no changes, and it's integrated and fully auditable. Sound like a cross between ODS and Data Warehouse? Yep. That's right.
2. Get the initial business sponsors to realize that only a 10th of the information housed in the warehouse is actually utilized by the business today. How? By looking at the trends of change, the patterns, and by working through particular business units to examine the applicability of DIFFERENT patterns to different businesses. Many times the business users (original sponsors) don't know all of the data that the warehouse contains, it's up to us to help them understand the NEW questions they could be asking - but it means we (IT) must be dedicated to learning the business!!
3. Start small, offer existing information with new reports, new aggregations to other business users - but TRACK the deployment of reporting seats, provide a specific logon to that group of users, or those individuals, and then track their query access in the database.
4. Provide the new group with a "TRIAL" login. Say: this login will time-out after X days. By the way, it took Y amount of disk space and Z time to build your solution. If you'd like to continue the login, please contribute to the project by either buying computing power, disk space, or funding changes to the product. Otherwise we will "get rid" of the data after X days, and drop the disk space - providing another group with access.
5. Of course this type of interaction ONLY goes to the ACTIVE groups against the data set. Use the monitoring results as KPA/KPI metrics for the business applicability, and don't give up at the first business unit that says: "I won't use your product... sorry."
6. Cut the business user in for the deal, ensure joint-marketing across the inside of the enterprise. In other words - say, they can get some of their requests funded, or changes made if they help recruit new business units.

I've been in this position and it's a good feeling. We had more projects funded in the first 3 months of production than any other IT program. We also had business stating: "IT finally delivered on-time and in budget, a quality product." Of course, they were unhappy that they didn't get the "world" in Phase I, but by Phase II three months later, they were signing like larks. We also had business units around the world asking our team for answers, and if we could replicate the success with their IT units, in fact, teach their IT department HOW to make it work. We were finally a profit center for our business units and IT. It felt good.

There are many more steps to making this a success, feel free to discuss them by replying to this post.
Cheers for now,
Dan L

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