InformationWeek

Sept. 11, 2000

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Lessons Learned In IT Expansion

For IT to be an E-business resource, companies must build on their strengths and look for others

By Carolyn Osborne

our company's strategic planning retreat is coming up and you've partnered with your peers in the business units to ensure that IT is an integral part of supporting their bold, new vision. Your company is looking for additional revenue to come to the bottom line, to expand its presence with customers, and to open new market channels. Have you explored another angle? What does it take for IT not only to support the business, but to be a business?

Capitalizing on operational expertise in IT, Carolina Power & Light Co. launched an application service provider business called Statusgo.com by leveraging the existing IT infrastructure. Statusgo.com provides a suite of asset-management software solutions to users, supporting more than 1,400 facilities in all 50 states and Puerto Rico.

Here are several factors that were taken into consideration before launching Statusgo.com:

The business needed to be aligned with the company's culture, capabilities, and direction. Because of investments in power plants, transmission lines, substations, and office buildings, CP&L developed expertise in asset management; Statusgo.com offers IT services that we used to support CP&L's internal operations. We only sell what we use.

The new business had to provide near-term value and the potential for long-term financial flexibility. Profitable from day one, Statusgo.com is building an autonomous asset that CP&L can capitalize on in the future.

It could not divert resources from the parent company's IT operations. The new business is self-funding, which mitigates the possibility of compromising CP&L's IT operations.

What does it take to launch an ASP? If you believe what you read, all it takes is a little hardware, a little software, and a fistful of marketing brochures. But if you want that business to be successful, you must focus on the customer's needs, manage the new operation as a business, and be flexible.

We have learned many lessons in launching an IT business:

Be open to possibilities and listen to your customers. Through a common partner we heard that Sears, Roebuck and Co. was looking for a way to manage its facilities and reduce operating costs. We were able to launch our new business with a large client and be profitable from day one.

Build on core competencies. The utility industry is capital-intensive because of its heavy investment in its infrastructure. CP&L understands the technology and the business of maintaining these physical assets. Our network and operations center provides an around-the-clock, highly secure environment for critical applications running on various platforms. In 1998, CP&L deployed Indus International enterprise asset-management software to support the internal business operations. This combination offered a strong basis for launching our ASP.

Leverage your partnerships. Our business model is based on strong alliances. CP&L provides the operational expertise for Statusgo.com. Our partners--Indus International, LawGibb Group, and PricewaterhouseCoopers--provide software, consulting, and marketing expertise. With these strong service-based partnerships, Statusgo.com offers an end-to-end solution with a proven track record.

Manage the new IT function as a business. Research the market and know your competition. Manage the relationship with your customers and be ready to eliminate services that do not provide value or to launch services with potential profit. Building upon our success, Statusgo.com is expanding to include enterprise resource planning, customer-relationship management, and business-to-business services.

Be flexible, respond quickly, and know when to stop. To be successful, respond quickly to changes in customer needs and take advantage of new opportunities. Continue to pursue your business plan, but also be ready to put Plan B into action. Consider alternatives, including taking your newest idea elsewhere. Think like a venture capitalist and you may become a passive investor in an independent new company.

Technology drives value--for customers, employees, and shareholders. By focusing on customer needs and basic business concepts, IT can be a strategic E-business resource.

Carolyn Osborne is CIO at Carolina Power & Light Co.

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