In the 1980s, when Information Systems was gaining a foothold as a vital corporate discipline, most companies managed their “computer guys” (they were almost always “guys”) under the supervision of the CFO, mostly because their focus was on business-critical needs such as order entry, accounting, and budgeting. Soon, as the range of IS functions grew to include areas like enterprise resource planning, supply chain management and sales force automation, and involve networks of software, hardware and outside vendors, the role of IS became more complex and strategic. Many companies concluded that structuring such a critical function under the CFO – or any other department – was squelching their overall business performance.
Hence, the birth of the Chief Information Officer, an executive position created to open avenues for technology to truly drive enterprise success.
Fast forward to today, where many companies — particularly software companies — have reached a similar moment, as marketplace shifts have left a serious gap in corporate management. How software today is sold and delivered, how customers use and derive value from software, and how those factors affect software company performance and valuation has – like IS decades ago – become more complex and strategic.
It is time to create a Chief Monetization Officer.
Monetization is More Than Pricing
To most, monetization means pricing, which is the crux of the problem. In truth, pricing is but one discipline within monetization, along with licensing and packaging. Together, these disciplines have become the most powerful levers software company leadership can adjust to affect revenues, profitability, and ultimately valuation.
The Importance Of A Chief Monetization Officer
Until now, monetization – really, just pricing — has been managed under the domain of the CFO, or in some cases a Chief Revenue Officer position created to give proper weight to all that goes into producing revenue for the company, such as Marketing, Sales and Customer Service. But monetization doesn’t produce revenue, it is the essential toolset required to produce revenue, and it crosses all business functions. Layering it on top of existing roles gives little attention or consideration to its value and hampers the company’s overall business performance. To be successful, monetization requires a dedicated perspective to assess and connect data from finance, sales, marketing, operations, customer support, customer success, product management, and product development.
An Opportunity To Examine Monetization
As our economy emerges from the impact of the coronavirus crisis, many of us will look at our organization through a new lens, making sure we are best positioned for a different future than the one we envisioned only months ago. For some, this presents an opportunity to more closely examine monetization and better exploit its impact. Don’t be surprised if your exploration leads you to a Chief Monetization Officer.
In Part 2 of this series, we explore the complexities of monetization and why this emerging discipline for software companies must be managed for maximum valuation.