Business need, plan, build, run, maintain, support. Basics.
I have worked for small business, large companies, government agencies, state and county. From an IT perspective, things aren’t all too different. The basics remain the same. IT is always part of cost.
Budget planning and actual spend historically had some form of alignment. Just like in government, if you didn’t spend the money you planned to spend, at the end of the year there would be a mad rush to buy things. I found the same to be true at the school division I worked for and in every large company I ever worked with and for. It never made any sense to me but I acknowledge that for accounting, it worked.
As years progressed and I gained insight and knowledge about how cost centers and expenses worked, I realized my MBA books on business and accounting were truly academic. Very small companies or small business has the strength and opportunity of a more consolidated view and insight of their cost center. However, they don’t have the knowledge (generally) or the expense account to know if they are spending and saving across the board in the most effective and efficient manner.
Through growth, they gain new knowledge and expertise and at some point, business planning and costs start to become more separate. This is the point in which the breakdown starts to occur because it would take a lot more knowledge transfer to understand and comprehend the complexity between both groups.
If you are still reading, there is a good change you know this already but I am getting there.
Once a company hits this front and back office split, all the knowledge from both converge at a new level. In abstract, it is with an influencer or decision maker.
Introducing the concept basically beyond S and more MB to LB or medium size to larger company. The left had doesn’t really know what the right is doing but every now and again they come together for prayer or clapping. Now, under these conditions whether the beginning or the end of this get together, we are rationalizing the dollars we planned vs the dollars we are spending.
Introducing the pressures of cost controls, market demand and service orientation for scale and savings places a new burden on decision makers who rationalize or seek to understand the whole.
The cloud promise was and is cost reduction through service, opportunity in scale, on-demand, speed to implementation, get what you need, lower run, less labor, less owned resource, etc. Very long list of promises.
The problem is that the left hand and right still only know each other in a limited sense. In addition to this, technology has become more complicated and more available from an endpoint perspective. Meaning, people can easily get services from the cloud with a credit card with some immediacy.
On the surface, this may seem like a very good thing but it is only a good thing if there is knowledge across the centers on what is being purchased and where. What this means fundamentally is we have broken the model of basic parts. We can easily skip over plan, there is no build and we go straight past run to consume. The idea is that IT is mostly “in the way” of progress is one of the issues that starts digging the cloudhole.
What starts to get lost?
- Understanding of actual savings vs spend
- Understanding of actuals
- Lack of knowledge on business need
- Disconnect from other facets of IT like cyber
- Increased overall cost
- Loss of knowledge worker and knowledge
- Lack of ability to estimate
- Lack of ability to forecast
- Competitive disadvantage through technological differentiation (ooooohhhh) I like that one.
What do you think?
More to come
One thought on “CloudNomics”
Competitive disadvantage through technological differentiation (ooooohhhh) I like that one.
I like this one as well and think that this is the strong and weak response for most organizations today. Some look for the advantages but spend money to never receive them or they don’t know how to account for them. Because in cost advantages markets still need to grow not shrink. Implosion can be a real issue.
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