Following on from my earlier post on the increasingly complex technical environment that developers have to work in, another difficulty of getting IT done these days is the reluctance of buyers to pay what it takes to get it done properly. Questions have probably always been asked about the value of IT relative to its cost, but over the last decade or so corporate finance departments have been paying closer scrutiny than ever to how much is being spent to get hold of the required IT.
When examining a cost-benefit analysis – or whatever other tool is being used to prove that the benefits outweigh the costs – finance knows a few simple truths:
- Costs and benefits are both estimates
- Costs will become real much earlier than benefits
- Benefits will always have an element of estimation but, once incurred, costs are concrete
This leads to a desire to reduce costs at the earliest opportunity, with the budget for the prospective project being driven down as hard as possible.
For those of us involved in the supply of IT, the response is obvious, especially if we’re trying to win the business of some would-be paying customer: reduce the cost of producing the required IT. With manpower being the highest variable cost1, effort is made to reduce its cost. And one obvious way to reduce the cost of manpower is to use cheaper staff.
The cheaper staff tend to be of two kinds:
- Young, inexperienced staff whose enthusiasm and appetite for spending long hours playing around with technology for no extra pay are pleasing to management, who think they’re getting something for nothing, but are no substitute for getting things right first time (yes, I’m talking about myself twenty-five years ago)
- Offshore staff, the shortcomings of using whom has been dealt with elsewhere
So, we’re now trying to meet a highly demanding set of business requirements by building a complex IT system using a disparate range of individually complex off-the-shelf component applications integrated with bespoke software within a tight budget, to a short timescale and using the cheapest resource we could find.
How do you think that’s going to turn out?
- Variable costs tend to be targeted first because (i) they are generally quite large in the first place and (i) they will have an ongoing detrimental effect on the project when things don’t go to plan [back]