General News

CIOs and IT Departments – Cost Center or Profit Centre

Published

11 years ago

September 10, 2015

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In business, an operating unit is either making money or it’s detracting from a company’s profits. In simple terms, it’s the difference between a profit center and a cost center.

IT Departments worldwide face the difficult task of demonstrating the ROI that they provide to their parent companies.

IT Departments provide essential support services to other departments within a company, however; these contributions are often not easily quantified into revenue.

Most IT departments traditionally function as cost centers, a business model in which funds are invested but an obvious return on investment is not easily visible.

There’s an increasing need to transform IT Departments into a revenue contributing business. The impact of IT on business is deep, pervasive, and growing.

We literally can’t separate IT and general business. The better any company exploits technology, the better they are at their jobs, knowing customers, working with partners, capturing markets, growing profits.

IT is being called on to transform business, and to do so IT must transform itself, too.

As the developing markets e.g. Nigeria matures, executives becomes wiser and sees the need to focus more on their core business.

And these we have seen with decreasing IT budgets, or outright outsourcing of all IT function. We can broadly say that enterprise in Africa are at a cross-road and are facing typical business challenges – which are changing the way IT function is organized.

Then Role of CIO is also changing – with the change in the IT requirements and model of IT engagements. IT is getting more and more aligned to business functions – and is seen as a critical enabler for conducting operations.

Traditionally enterprises in the Africa have taken a CAPEX centric approach, – however they now starting to realize the need for and benefits of – OPEX based models.

What this means is that organizations are looking at means to improve ways in which business is conducted.

This may be true for all functions within an organization like Supply Chain, sales and marketing etc.

In the current context of business transformation, including IT departments, CIOs need to innovate in order to stay relevant. Based on survey amongst CIO in the West Africa region, the top priorities for CIOs and IT Managers are getting executive buy-in and support for strategic/innovative IT projects; obtaining budgets for IT investments and managing growing expectations and service needs. I strongly believe CIOs can take advantage of these challenges to re-invent themselves and be seen differently by the business. CIOs need to more from IT productivity to business productivity.

IDC had in different forum highlight the advent of disruptive technology with the 3rd Platform: Cloud, Mobility, Big Data & Analytics and Social technologies had impacted the way IT is consumed. This in itself provides both opportunity and a threat to CIOs and their IT Departments.

An opportunity, if the CIO takes advantage of these to reinvent his IT department by showing value beyond that been seen as a cost center to becoming a profit center.

And the 3rd platform could be a threat if The CIO does nothing other than “keeping lights on” and just maintaining IT systems. Some CIOs can hardly leverage IT to unlock real value and profit, and as a result, most businesses treat IT as a cost center, because that is what it is to them. CIOs need to take advantage of exploits in technology, knowing the business, knowing the business’ customers, working with partners and to growing profits, thereby maintaining their relevance to the organisation.

Already a new class of strategic IT organization is emerging, one that uses the business of the 3rd Platform in cloud, mobile, mixed-sourcing, strategic souring, and e-commerce as core components by delivering business services even better and cheaper than some IT departments.

How Can CIOs transform their IT Departments from a Cost Center to a Profit Center?
The process of transforming a cost center to a profit center is not a simple one, but it’s very achievable.

The first step in transitioning to a profit center is performing a gap analysis. IT leaders should take stock of what they really need to transit, that is, judge what the current position is and decide on the eventual goal of the department.

IT leaders must be certain to ensure that they identify and assess all barriers to transforming the IT department as well as discover what variety of the profit center model is most suitable to the company. Questions that could be asked during the gap analysis are the following:
•    Is there a market or how can I create a market for the IT department to sell identified services to external companies?
•    Do I have resources or partnerships to evolve the transition?
•    Do O I have a sellable transition business plan to the business?

Take a stock of your IT investments in Licenses or infrastructure, there is a service you probably can compartmentalize and extend to provide and sell to small businesses?

CIOs and IT Managers may also consider a “Charge Back” model to internal sister departments within the corporate depending on the size and structure of the parent company.

A charge back method would strive to frame and describe the means in which an IT department’s sister departments can compensate IT for “extra” or “additional” or “add-on” services delivered e.g. Bring Your Own Device (BYOD) implementation for enterprise mobility.

Creating a charge back method requires participation from all of IT’s internal business partners. Developing a compensation or charge back has the potential to be politically explosive within a corporate, but the benefit to IT is that it can help dispel the notion that it is a cost center by enabling IT to prove that it can generate obvious revenue or at lease save significant cost by regulating technology consumption.

By charging internal business partners for IT services, IT would be able to clearly show the benefits their services provide. For bigger corporation where departments are responsible for their own IT budgets, IT departments need to determine competitive differentiation in delivering its services. Competitive differentiation in this context means that IT should realize that they are not guaranteed to win all contracts put up for bid by internal departments.

IT departments must ensure that they are competitive with their outside competition and must display this competitive advantage by completing projects in an efficient and timely manner.

It is important to know that transforming IT departments from cost center to profit center is a new paradigm that is essential because of the way technology usage is changing. While it may not be popular now does not mean it’s not worth considering.

One phenomenon that we already see putting threat on the job and relevance of CIOs and IT Departments is Business Process Outsourcing (BPO). It’s gradually permeating the IT space as well. Locally, we’ve seen where a whole IT department is outsourced.

You may argue that that is on bigger scale and only big companies can possibly do that. The truth is that when Cloud Computing is at its best, and regulations permit, small and mid-size companies may decide access ERP, CRM services from the cloud on a subscription basis and move from CAPEX to OPEX model as far IT is concerned.

Ten years ago, CIOUpdate.com columnist Sourabh Hajela states that “IT cannot work as a profit center because it fails to meet the requirements for a department to function as a profit center because of the following reasons:
•    Revenues and costs: Accurately quantifying revenues and costs.
•    Market: A focus on customer relationships that are generating higher profits and either discontinue or deemphasize those that aren’t.
•    Product Mix: The creation of a portfolio of products and services driven by market demand.
•    Product pricing: Price products and services to maximize profits.
•    Timing: It is often said that, in business, timing is everything. Profit centers are profitable when they can quickly respond to a market opportunity.”

Mr. Hajela general surmises that IT departments cannot work as profit centers because of its close alignment with other business departments. “An ITO cannot work as a profit center because it has a captive relationship with its “customers,”

I am sure this suggestion by Mr. Hajela has been over shadowed by the advent of the disruptive technology in the 3rd Platform and the emergence of new models and options for businesses to consume.

In a short while, there will be an increasing pressure to transform IT Departments into a business, a revenue generating entity. CIOs should be prepared to answer the question, what kind of transformation makes the most sense for my business?

I’ll close this article with a quote from Charles Darwin that “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”

Bola Adisa
Email: [email protected]
Phone: 07061547518

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General News

FirstCap Closes N4.46Bn LAPO MFB SPV Series 1 Bond, Deepens Access to Long Term Capital

Published

6 hours ago

May 6, 2026

Chike Onwuegbuchi

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FirstCap, an investment banking firm and subsidiary of FirstHoldCo Plc., has successfully closed the ₦4.46 billion Series 1 Bond Issuance by LAPO MFB SPV Plc, reinforcing its strong leadership in Nigeria’s debt capital markets and deepening access to long term funding for high impact sectors.

Acting as Lead Issuing House, FirstCap structured the fund raising on behalf of LAPO MFB SPV Plc (a company sponsored by LAPO Microfinance Bank Limited to mobilise institutional capital targeted at SME financing, renewable energy expansion, and digital financial services, three critical drivers of inclusive and sustainable economic growth in Nigeria.

The transaction is underpinned by a compelling impact thesis, with proceeds strategically deployed to support small businesses and clean energy initiatives. The microfinance sector continues to demonstrate resilience and strong fundamentals positioning the issuance at the intersection of growth, sustainability, and financial inclusion.

Commenting on the transaction, Ukandu E. Ukandu, Managing Director, FirstCap Limited, said: “This successful issuance underscores our strategic commitment to directing capital where it delivers measurable economic impact. At FirstCap, we partner with institutions that have the scale, discipline, and vision to transform markets, and LAPO exemplifies these qualities.

The ₦4.46 billion bond is positioned to be a catalyst for SME growth, expanded energy access, and broader financial inclusion. We remain committed to structuring transactions that are not only bankable, but impactful and aligned with Nigeria’s long term economic trajectory.”

FirstCap Limited remains committed to leading from the forefront of Nigeria’s capital markets, structuring transactions that are bankable, impactful, and investable, while supporting the future trajectory of Nigeria’s economic development.”

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General News

MTN Foundation Opens Applications for 2026 Scholarship Programmes

Published

6 hours ago

May 6, 2026

Ugo Onwuaso

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The MTN Foundation has opened applications for its 2026 scholarship programmes as part of efforts to promote academic excellence and support financially challenged students across Nigeria.

MTN Foundation

The foundation, in a statement on Monday, said the application cycle covers its Science and Technology Scholarship (STS), Scholarship for Blind Students (SBS), and a newly introduced scholarship category specifically for medical students.

According to the foundation, the medical scholarship was previously embedded within its broader STEM scholarship category but has now been carved out to provide targeted financial support for outstanding medical students in public tertiary institutions and teaching hospitals nationwide.

Under the 2026 programme, 400 successful applicants, including 100 medical students, will receive annual scholarship grants of N300,000 each.

The foundation said the scholarship is designed to support tuition, textbooks, and living expenses, helping beneficiaries focus on their studies amid rising education costs and current economic realities.

Executive Director of MTN Foundation, Mrs Odunayo Sanya, said the scholarship programme reflects the organisation’s continued commitment to youth development and educational advancement.

“This call for applications reinforces our long-standing commitment to Nigerian youth by providing them with the resources needed to compete and excel globally.

“Our aim is to empower these bright minds to become the drivers of a technologically advanced Nigeria. At the MTN Foundation, we firmly believe that financial limitations should not stifle academic potential,” she said.

The foundation said eligible applicants include 300-level students studying Science, Technology, Engineering and Mathematics (STEM)-related disciplines in public tertiary institutions.

Medical students in 400-level at public universities and teaching hospitals are also eligible, alongside blind students in 200-level and 300-level courses.

According to the statement, the N300,000 scholarship is renewable annually until graduation, subject to beneficiaries maintaining the required academic standards.

It said STS recipients are required to maintain a minimum cumulative grade point average (CGPA) of 3.5, while Scholarship for Blind Students beneficiaries must sustain a minimum CGPA of 2.5.

Beyond financial support, the foundation said beneficiaries would also gain access to mentorship opportunities, technical training, and employability workshops under its Skill Up initiative.

The initiative is designed to equip students with practical and soft skills required to succeed in an increasingly competitive and digital global economy.

The MTN Foundation Scholarship Programme, now in its 15th year, has become one of the company’s flagship education interventions, supporting thousands of students across Nigeria.

The foundation said the programme continues to remove economic barriers to education while contributing to national development through human capital investment.

Interested applicants have been advised to submit their applications through the official scholarship portal before the deadline of May 31, 2026.

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General News

Amezcua Marks 20th Anniversary with Global Rollout of GX-1 Wellness System

Published

6 hours ago

May 6, 2026

Ugo Onwuaso

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International wellness technology brand Amezcua is marking its 20-year milestone with the global rollout of the GX-1 Bio-Reset System, a non-powered grounding mat designed to be used as part of everyday wellness routines.

Amezcua

The launch signals the first phase of Amezcua’s 2026 expansion across the Middle East, Central Asia and Sub-Saharan Africa, regions experiencing accelerated growth in consumer-led, lifestyle-oriented wellbeing adoption.

Nigeria’s wellness and personal care market is experiencing a significant surge, with the beauty and personal care sector alone valued at approximately USD 7.8 billion in 2023.

This rapid growth, expected to continue with a compound annual growth rate (CAGR) of over 17% in some segments between 2023 and 2027, is driven by a profound shift towards preventive health, natural products, and holistic wellbeing.

Designed for daily use at home or at work, the GX-1 requires no electricity, charging, batteries, or powered connection. As a non-powered mat, it does not generate electrical current or emit signals.

The system includes a conductive connection wire linking the primary mat to a secondary floor contact pad. The portable mat is intended to complement rest, recovery and overall well-being routines as part of broader lifestyle practices.

Amezcua is a wellness technology brand under QNET, a wellness and lifestyle-focused direct selling company. This latest launch reflects the organisation’s continued focus on accessible, nature-inspired wellness solutions.

“Over the past two decades, we have observed a global shift from reactive healthcare to proactive wellbeing”, said Mattias Mildenborn, Chief Executive Officer of QNET.

“The GX-1 reflects that transition by offering a simple, non-powered solution designed to integrate seamlessly into modern lifestyles without requiring additional digital dependency,”

Grounding – sometimes referred to as “earthing” – is a wellness practice that continues to attract interest internationally.

Amezcua emphasises responsible communication in the evolving wellness space and positions the GX-1 as a lifestyle wellness product and not a medical device.

Elena Khoo, Chief Marketing Officer of QNET, said transparency is essential as consumer literacy continues to grow. “The wellness sector is evolving rapidly, and consumers are increasingly discerning.

“Our responsibility is to communicate clearly that grounding is positioned as a complementary lifestyle practice, not a form of medical care or intervention. Transparency builds long-term trust.”

Materials, Safety and Quality

The GX-1 is made with an electroconductive polyurethane (PU) upper layer and Thermoplastic Polyester Elastomer (TPE) foam for the base layer.

Independent testing conducted by Bureau Veritas confirmed that the materials comply with the European Union’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) chemical safety regulation, with no Substances of Very High Concern (SVHC) detected.

The materials are hypoallergenic and safe for prolonged skin contact. The product is manufactured under an ISO 9001:2015-certified quality management system and is positioned as a non-powered general wellness mat, not a medical device.

Product Formats and Everyday Use

The GX-1 is available as a pack of two: a large mat and a small mat. The large mat is designed for versatile use — for example, placed on a bed beneath a sheet, used on a chair or sofa, or used as a yoga mat as part of a personal wellbeing routine.

The small mat is designed for portability, including use when seated during travel (such as flights) by placing it at the feet or at a work desk. For users who want extended coverage, the two mats can be connected to create a larger continuous grounding surface.

The product is available through the official QNET e-store and via authorised Independent Distributors in participating markets.
As Amezcua expands into new regions throughout 2026, the GX-1 launch signals the brand’s continued focus on nature-inspired wellness technologies adapted for contemporary lifestyles.

For more information, visit www.amezcua.com.

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