News Feature

Innovation For Growth

By Elana Varon

August 15, 2006 — CIO —

After years of asking IT to focus laser-like on cutting costs, reducing operating expenses and (for a change) cutting some more costs, the enterprise has finally embraced the idea that IT should be driving innovation. Experimentation has been sanctioned at the highest levels. To grow, companies are now willing to assume a measure of risk, and CIOs are thinking not merely about how technology can help their companies survive (while, heaven forbid, not adding overhead) but they are working to gain competitive advantage by actually doing something new.

That’s the message we’ve received from the diverse group of organizations that compose the 2006 CIO 100. Whether they were at a small nonprofit like MediSend International (which used supply chain management technology to reinvent its business model for distributing humanitarian aid) or a $20 billion behemoth like Goodyear (which used supercomputers to model new tires), CIOs this year creatively used IT to advance their companies’ strategic goals. And these companies did not simply deploy the latest technology. What sets our honorees apart is how they used IT in new ways to generate business value, whether by creating new products and services, developing better ways to serve customers or tackling operational challenges.

Two-thirds of the CIOs among this year’s honorees report that their IT budgets are bigger than they were two years ago, according to our annual CIO 100 survey. (For all the survey data, go to www.cio.com/cio100.) On average, the honorees are spending 38 percent of their budgets on new projects, and more than three-fourths said their companies were willing to assume at least a little bit of risk in the process.

It Takes IT to Make Money

Since time immemorial (or at least since the dotcom bubble burst), IT departments continually have been challenged to demonstrate the value of technology investments. For years, CIOs found that value in IT’s ability to cut costs. Now, as Senior Editor Stephanie Overby writes in "Money (That’s What They Want)," Page 50, smart CIOs are dedicating a portion of their IT portfolios to projects that make money. For instance, credit card purveyor Discover Financial Services is integrating its payment network with that of China UnionPay—China’s only credit card provider—thereby giving ¿Discover cards a competitive advantage in China over its larger American rivals, Visa, MasterCard and American Express. The result is that Discover’s card is now more widely accepted in China than its competitors’.

Even nonprofits have gotten into the act. Ball State University deployed a wireless network for its campus and the surrounding neighborhood and then turned it into a profit center by marketing it as a testbed to telecom companies and government agencies. The university has inked agreements with wireless technology vendors and the federal government worth up to $1 million annually.