April 6, 2010 at 7:30 am
Note that I wouldn't present every tech decision to business people, but there are times where I think giving them a little insight into the costs for different solutions that YOU have picked, makes some sense. I wouldn't give them a bill for testing v development v support, but I might give them a bill that shows a project with x resources (1 dev, 1 tester) and y resources (2 devs, 1 tester) and some times and let them help decide how much the project is worth.
April 6, 2010 at 8:16 am
The last three posts are how we're doing things and it really has helped. IT frames it up and business chooses from our estimates or maybe bargains for a middle path when the options aren't great. Agile makes the cycles tighter so we can have more places to pause work and move something else ahead if need be. Business has a better relationship with IT in the areas where they can participate in decisions and trusts us more it the areas they can't, which are frequently driven by technological or contractual obligations. It just so happens that those areas are the money sinkholes (SAN, security, support contracts, etc) that tend to draw attention (in a bad way) when the budget gets tight.
[font="Arial"]Are you lost daddy? I asked tenderly.
Shut up he explained.[/font]
- Ring Lardner
April 8, 2010 at 12:39 pm
Interesting editorial.
Yes, the business has to know what it's getting and what it's paying for it. If it doesn't it can't take rational decisions about budget, about forward planning, about how to manage cash flow, about priorites, about how to choose between options. Of course if the IT department is costing peanuts, maybe this doesn't matter - as long as your IT requirements can be satisfied by monkeys all is OK.
On the outsourcing risk that someone raised: if the department is doing a good affordable job and the business managers can see why it costs what it does and how it spends its money it won't get outsourced, especially if the business managers have prior experience of outsourcing. On the other hand, if they know it's costing an arm and a leg and have no idea how that cost relates to business benefit they woul be crazy not to outsource if they could find a reasonable way of doing it - unless they can bring IT under proper control some other way: like maybe fire the existing people and find some employees who recognise that they have to explain the IT benefits in business terms and demonstrate that the department is cost effective. Will that help exitsing employees keep their jobs? Maybe yes, as long as we aren't talking about the ones in the IT department (apart from maybe ones at a pretty junior level).
There are extreme cases of course, like companies that have burnt too much capital and have to cut costs even if it will damage core capabilities, and in those cases outsourcing may look like a good option even when it isn't; but how did they get there in the first place? Maybe by not being able to prioritise IT and other spend properly, because there was no clue of how IT spend related to business benefit. And what's the alternative to outsourcing? Well, one good one is to set up a new subsidiary to take on the IT function in a country where it will be cheaper - this isn't outsourcing, because the company still controls it directly, not through some sort of services contract, and still has hire and fire power over the staff. Another is to cease trading and sell off as much as possible - which won't include the IT function if what it does for the business and how it spends its money are not visible. Neither of these alternatives are particularly pleasant for the employees in the IT department.
One thing in the editorial frightened me:
I don't know I'd want to do this for every service or project, as some span departments or large sections of the company, but I could see some value here for small projects that often crop up.
Unfortunately it's letting the big projects that affect everybody and everything fall through the net and go forward without proper cost-benefit and cash-flow analysis that causes real trouble - like killing off the company because the creditors are getting restless and the backers have had no explanation that they can understand of what is going on.
Tom
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