Organizations have an affinity for numbers. While it is true that numbers can be useful in planning and are essential to budgeting, numbers never tell the whole story: as popularized by Mark Twain, “There are three kinds of lies: lies, damned lies, and statistics.”
As part of the numbers game, a disturbing trend is emerging. Organizations are using numbers to justify moving their I.T. budgets into the unmeasurable.
I have no numbers to support this idea; I’ve not done any real research on the issue. (I do think it would make a worthy study for a thesis or dissertation. Of course, this subject is not theoretical enough to qualify in any computer science graduate program! Perhaps a program in communications or information systems would allow such a study.)
If you still have no idea what I mean, don’t worry: I may have no idea myself! In an attempt to explain, I offer this scenario:
An organization with ten departments, including an I.T. department is looking to reduce expenditures. Immediately, managers notice that the I.T. department costs a considerable amount of money, but does not directly contribute to productivity. A little research reveals that most of what I.T. does can be outsourced: Move all the storage and applications into the cloud; use hired guns to provide desktop support and repair; pay an outside firm to develop, host and maintain the web presence; hire programmers on contract when needed. On paper, the savings are evident and profound. My question is: does this really help the organization?
There is an immediate and measurable savings to the overall budget in salaries, space, and supplies for the now defunct I.T. department. Therefore, a real reduction in expenditure. Right?
I propose that the savings are mostly on paper rather than an actual outcome.
The first effect is that repair costs are moved from the overall company budget to the departmental budgets. The savings can be measured at the top, but produce increased costs at the departmental level. Unless departmental budgets are increased to cover these expenses, departments are negatively impacted.
The new model inevitably increases down-time, since travel time is increased for the support personnel. (Before, the in-house people were already there!) Again, on paper this is not a direct cost. Increased down-time is difficult–if not impossible–to measure directly. We can only guess how much this costs the organization, but it does have a cost!
The biggest down-time increase may occur in server down-time. Out-sourced storage and applications cannot be directly managed. When something quits, someone has to call the provider, wade through the systems–both electronic and human–to communicate the issue and begin the process of resolution. In many cases, this will cause down-time for the entire organization. This is very costly and very difficult to measure!
As for the web presence: One of the most powerful features of web publishing is immediacy. Content may transform from an idea to a published article in hours. Since distribution occurs at near light speed, a discussion in a marketing meeting before lunch could be on the consumer’s screens before dinner! In a perfect world, similar results would occur with out-sourced web hosting. The decrease in connection speed caused by moving to an outside server is negligible. As long as the new content doesn’t require a professional web developer, outsourcing the web site has virtually no impact. Of course, if the changes do require a professional web publisher, the impact may be great. Depending on the contract and the outside firm’s abilities there may be additional cost and delays. Not so immediate any more.
Finally, I have great trepidation about moving storage into the cloud. Trusting mission-critical data to people and systems that I have not personally seen scares me. My vivid imagination and tendency toward worry lead me to envision an outside storage provider holding data hostage. In the theoretical perfect world, the contract with the storage provider would guarantee the safety and availability of data and the company would fulfill the contract flawlessly. Since the world I perceive is less than perfect, the possibility of losing access to needed data because of reaching a contractual bandwidth or storage limit seems real and terrifying. If the storage provider were unscrupulous or incompetent, disaster may well ensue: corporate secrets sold to competitors, security breaches leaking sensitive information.
I freely admit that I currently make my living providing in-house I.T., so my view is skewed, but I am compelled to warn people that make decisions about budgeting to understand the difference between real savings and moving expenses into the unmeasurable. Pretty numbers in a spreadsheet provide little solace after an organization suffers grave damage from a well-intentioned mistake. Know also that the I.T. people that lose their jobs are not going to return begging when the error comes to light and the new I.T. department is hiring!
Peace,
Stu…