As far as IT and company spending in general, there are many gaps between what is paid for and what is valuable. However, if one considers that this country went through 30 years of almost nonstop growth and expansion, it’s easy to see why little attention was paid to controlling costs. We may both be seeing the effects of this changing. It is likely that the next 10 years or so will not see any growth and could very possibly see contraction.

If we transition into an era of little or no growth, resolving the gap between what vendors try and sell and what clients needed, will need to be resolved. If you consider that the last time the world faced this type of no growth environment was during the great depression, there really isn’t anyone in management who knows how to operate.

Figuring this environment out, for people who came of age in an era of high growth, will be a challenge. I look forward to your scenarios and thoughts.

As far as the Elance prices are concerned, for the work we had to do, that is actually a very competitive bid. So much so that I’m having difficulty getting our guy to dedicate time to my project. He has other projects paying him more. Our timeline is flexible enough that this is not a problem and I am happy to see that the laws of supply and demand in action.

If I give up this gig, maybe I’ll move to South America or Asia or Eastern Europe for a year or two and do contract work through Elance. I’ll earn plenty and sin voraciously.

Thanks for the laugh. Miss having you here in NY. I wish I could go back a few years and work more closely with you.

You’re right, and I agree with what you’re saying.

In fact, I wrote about something similar back in ’07 on the Progress blog. Content which I’ve moved over to my blog here.

I think companies “buy too much”, and vendors of course encourage that behavior. Vendors use fear, and prey on customer’s lack of understanding, and fear that there’s something they won’t think of and that they’ll have to go ask for more money.

You see, the whole budgeting process is at fault. The process penalizes someone who spends less up front, but needs more that they didn’t expect down the line.

Though I agree with you, I still think my point is valid. I have a specific use case in mind that I am thinking about. I’ll write it up shortly, and perhaps this post will make more/different sense.

I think some companies do look at costs and make decisions based solely on cost. Forgetting, forgive me, capex vs opex distinctions for a moment… what I’m thinking of is the unspoken cost of doing a half-assed solution.

A phone system may be a bad example, but if a company chooses NOT to do something, and employees incur a cost. The employees that “have to do the work” not “support the work” have a cost that’s not accounted for. No one is saying that the employees I’m talking about above won’t have to make phone calls. It’s just that the company is choosing not to install a phone system. Employees will have to use their own phones, or business units will have to each get their own phone systems installed. Worst case, the team gets together and shouts simultaneously and hopes the customer hears them… while IT celebrates their reduced cost operation.

IT cost decisions made in absence of business value context simply don’t make sense. Business needs to agree with the decision, and adjust accordingly. In my case above, the business would have to agree that phones were unnecessary to doing business, and would forgo phones. My point is that they can’t forgo doing business over the telephone, so IT’s assumptions, and costs savings are not true with the burden falling on the employees who now need to figure out how to make (and absorb the cost of) phone calls.

(Hi)

I still would like to respond to your last, thoughtful comment. But, I’ll do this one partially and quickly. Swamped at work.

One would hope, regardless of hurt feelings or right and wrong, people and companies would do “what’s right”.

By the way, I saw a CNN segment on this situation last night and discussed it with Vanessa, so do have more details. Of course, they’re all second hand!

In short, there are a few interesting points from which we can learn a lot.

1. The account was started as a company account, on company time. It’s company “property”.
2. However, the company allowed him to blog about moving on, a blog in which he said you can keep following me on the same twitter account. One can assume the company therefore approved of his keeping the account.
3. There was no social media use policy, so there were no clear guidelines.
4. And, finally, people/employees need a plan, just like companies do, for building a social media presence that goes beyond their current corporate role.

By the way, the lawsuit is based on a corporate secret rule/law, based on the fact that the password used to login to the account to change it from company to personal branding would have been a secret to anyone outside the company (since the follower list itself is public).

you ask an interesting question and this is an interesting an undefined area. What is the value of a Twitter/Blog/Facebook following that is built under the umbrella of a successful organization while someone is associated with and paid by that organization.

Specific to this case, if you check out the recent story in Inc. about buying Twitter followers (http://bit.ly/t4nqQU), there is a defined market and negotiated price. So, Phonedog followers have a comparable, discover-able market value. Is the value ($340K) stated in the lawsuit reasonable?

I know from personal experiences I’d rather not think about, that the corporate lawsuit threshold is $250K. So my EWAG (Educated Wild Ass Guess) is that there’s actually about $90K worth of Twitter value and $250K worth of lawyer requirements in this case. $90K for 17K followers is high, but I’m sure there are some snubbed noses that need to be appeased.

Equally, there are significant facts that are not presented. For example:
1. It would be interesting to know what Kravitz did after he left.
2. If Kravitz went to a different company, where does that company fit in the business environment phonedog operates in.
3. When did the people at phonedog realize the value of what walked out the door?
4. What was/is Kravitz’s legal position as a vested partner in phonedog?

There’s actually a lot that’s not presented. Isn’t that always the way?

What is interesting about this case is the fact that Kravitz took the account with him. Prior to leaving, he easily could have sent a tweet out requesting his followers to switch to a different/new account. This leads me to believe neither he nor phonedog understood that there was value to be considered.

This is an interesting and undefined legal area. Obviously there are a lot of facts we don’t know, but it doesn’t seem that the facts of this case lend themselves to clarifying this area.

As always, we don’t live in an idea world, we live in the “catch as catch can” world. Muddy situations rarely lead to clear solutions. But they do lead to interesting discussions. I’ll be interested to know your thoughts,

Andy

congratulations on a truly amazing bit of writing. You wrote a scenario and then misunderstood it. Your scenario was “What sort of tele­phone sys­tem do you buy?” if cost is your driving criteria?

The answer is, you buy the lowest cost phone system, not, no phone system. “None” isn’t an option to replace a phone system.

It’s actually easy to tell when a phone system starts going on the blink, calls start being dropped, messages can’t be played, etc. When phone system starts going bad, the business requirement is clearly shouted, “get me a new phone system!” (I deleted the expletives to spare your sensitive NY readers…)

Your scenario and the post you linked to, bring up an interesting and subtle point, what does it mean to meet business requirements. I’ll take your phone scenario, because we replaced our phone system last year, so I’ll provide numbers to back up my point.

If you do an RFP to look for phone systems, you find there are a number of alternatives and those alternatives have a wide range of prices. For a seventy person company, there were options over $200K. They were excellent systems with many intriguing features. However, we went with a system that cost $34K that is good enough.

There’s an interesting question in the IT world, when is a requirement a “nice to have” and when is something “good enough”? And the follow on is, how much are you willing to pay to move from “good enough” to “nice to have”?

I would put it to you, that in this brave new business reality, “nice to have’s” and “best of breed” will vanish from the business lexicon. The future for IT Executives is exactly what is described in the post you linked to, how does an executive cut CAPEX by 50% and increase capabilities? That author didn’t go into details, but I bet OPEX is also being cut. Hell, any imbecile can cut CAPEX by 50% if no one’s watching OPEX…

If you have to cut both, how do you do it? By using RFPs to clarify requirements, understand the costs and shift power away from the vendor to the buyer. That’s how you buy a new phone system for $34K rather than $200K+. Another example: A business can buy an onsite ERP systems for $1mm plus, which also requires hiring two employees, each costing $120K a year. Or that business can get a cloud based ERP at $50 per user per month that requires no additional employees be hired.

The cloud based ERP system will cost about $60K per year, which is less than the maintenance costs for the onsite system and you won’t hire any additional employees. Oh, and with the cloud based system, when you need customization, you hire a developer through Elance for $35/hr rather than through a consulting company for $285/hr.

That is the “Cost-Value Conundrum.” Every IT Executive should be given the mandate “Give me better capability than I have today and cut your budget by 50%. It’s up to you how you achieve that between OP and CAP. Oh, and I’m going to cut your budget again next year and the year after that too.”

Yes, you have to understand requirements, but also understand that IT is a cost center, just like accounting or HR or building services. The question is, how to provide the business the IT services or accounting services or HR services they need at the lowest cost? Unless your IT services can move the dial by increasing revenue, they better move the dial by decreasing costs. In the current environment, there are plenty of options to decrease costs while increasing value and revenue.

That is understanding that doesn’t require special training to communicate.