How to Monetize IT

To Monetize:
1. To find corresponding value in currency.
2. To make profitable.

Examples:
1. “When I monetized the work I did last month, I found I was able to save the company $3,500.”
2. “We were able to monetize our websites by revamping our SEO work.”

Quick quiz questions:
1. What is the dollar amount that your IT department brings to the company based on contibution by each person?
2. What is the total salary the IT department is paid?
3. Which is bigger?

Yes, this quiz is misleading and could get me into a few brawls. And yet…. There is something to it. If any group costs more than its value to the company, something’s amiss. If a salesperson brings in $20K yearly, but makes $130K, what would people say? And yet, turn this around to IT and people go mute. Businesses are not in the habit of comparing cost to ROI on IT groups. There are a number of reasons for this. For me, though, none of these reasons adequately explain why we shouldn’t do cost and performance analysis with our IT teams.

Let’s just get this part over with at the beginning: Why monetizing IT is difficult.
1. Business people don’t understand what we do, to say nothing about evaluating us, our contibution, or our performance.
2. If you install and maintain an MS Exchange email system, what is your dollar worth to the company? What is the dollar value of having Exchange? What is the value of your mainenance work?
3. If you maintain a web server for marketing sites, what is your value to the company? What is the hard dollar value for those sites? What is the cost of them being down for 15 minutes? For a day? For a week?
4. If you’re a DBA and you’re responsible for keeping the databases responding quickly and you’re a success, what is that worth?
5. Harder still, if you’re a DBA and you’re responsible for implementing access rights to production databases, what is the cost benefit from that?

Hard questions. No question about it. And why? Because there’s no one on the business side saying how much it’s worth to them in concrete terms.

But, we are IT people. We solve hard and complicated problems for breakfast. It’s what we do and it’s what makes us us. And we do not shrink from challenges.

So, let’s jump in a start analyzing ways we can put some of those hard and solid figures we love so much to use for our own marketing.

What makes up financial contribution to the Enterprise?
1. Revenue (Sales)
2. Cost Savings (Reducing Spend)
3. Time Savings (Efficiencies and Improvements)
4. Revenue Facilitation (Empowering Revenue Generation)

Tracking #1 is easy. Just add all your revenue up. No sweat.
Ditto for #2. A penny saved is a penny earned. If it’s good enough for Benjamin Franklin, it’s good enough for me.
#3: Time is money. If you know who’s time you’re saving, you know two things: Their hourly rate ($yearly salary/2080 hours) and their hourly revenue ($revenue/2080).
      If you save one hour of their time a month, then that’s one hour at their hourly rate PLUS one hour of what they contribute during that hour. After all, if you hadn’t saved them that hour, it would have been wasted.
#4: Like #3 above, if you help someone else bring in money, they you are responsible for a portion of that money.

And now, on to the hard part. How do IT Service Offerings fit into these buckets?

We’ll address that in our posting: Monetizing IT – the Details!

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~ by naturarerum on February 8, 2009.

One Response to “How to Monetize IT”

  1. [...] The first of these will be detailed in another posting: How to Monetize IT. [...]

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