12-Business models

What do most marketing technology vendors fail to emphasize in their customer value propositions, thus risking the sale?

FOUR IT DEPLOYMENT STRATEGIES

Successful marketers of enterprise technology demonstrate how their systems enhance the prevailing business model of the customer enterprise.

The figure below depicts four ways position a business-model enhancement—the deployment of technology to how an end-use customer firm attracts, serves, and keeps profitable customers for life.

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Cost centers characterize the way many firms treat IT solutions that deliver process improvements: Where can a firm produce results of higher-quality, with fewer hassles, and more predictable outcomes? Generally, executive management pursuing cost-cutting measures will first target cost centers to downsize, outsource, or eliminate altogether.

Profit centers recoup some investments by implementing internal chargebacks for services rendered or selling ancillary digital assets or technology to other parties inside and outside the enterprise. Often this strategy alone recoups enough profit to pay for the initial technology investment.

Revenue centers serve customers outside the investing enterprise, creating sufficient profits that it can serve internal groups at no charge or for a nominal fee. External customers essentially subsidize the delivery of technology benefits to internal customers. However, most revenue centers do not employ aggressive marketing strategies and merely serve those customers that manage to find them.

Revenue channels represent the application of technology to the creation and operation of a new business. Revenue centers often create new markets by leveraging new technologies for a competitive, if not unfair, advantage. Revenue channels aggressively market their services and may grow quite large relative to the investing parent firm. This can make a revenue channel an attractive spin-off venture.

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