An interesting area business case writers often miss, especially those in a technical or operational capacity, is Opportunity Cost.
For those who aren’t in the know, in economic terms Opportunity Cost is defined as “A benefit, profit, or value of something that must be given up to acquire or achieve something else”
If we take a typical DBA Managed Service requirement, for example:
1. You’re an IT Director/Manager of a mid to large organisation
2. You have 4 x DBA’s managing your Oracle and SQL Data Platforms.
3. You’re experienced to know that on average, a DBA will stay around 2 years before leaving for another other job (for whatever reason)
4. Therefore, every year you will have to go through the recruitment cycle twice
5. Your recruitment cycle, takes up a lot of your time; shifting C.V’s, interviewing, HR process, training, etc
In this scenario, Opportunity Cost is all those projects, new processes, meetings and decisions you couldn’t make because you had to shift through C.V’s, interview and do all the HR admin stuff that comes with recruiting these DBA’s twice a year.
This has further implications to the business – the Opportunity Cost means all those decisions you couldn’t make, projects that have been delayed and stakeholders who depend on you cannot be satisfied, because your time is taken up with laborious recruiting activities.
For a Data Analytics or DBA team, this means time and effort integrating new personnel into the environment and training them up, thus delaying projects and initiatives. Without exaggeration, the effect ripples throughout the business up to board level.
Opportunity Cost is a critical measure of moving an IT operation from a fire-fighting, reactive, cost centre; to a service orientated, pro-active state.
Managed Services, particularly in the data platform, can have a tremendous impact on mitigating workloads and resource management within an IT Operation.
For instance, more often than not, Big Data is a key agenda to most CIO’s. However it’s also one of the hardest to recruit for. DBA’s are often best placed to cross train and move into a Data Analytics role. Backfilling with a Managed Service in this scenario can rocket Big Data initiatives by applying resource already familiar with your business and data platforms.
Realising understanding and defining opportunity costs make for a richer business case, for not only the managed service you’re evaluating, but other items on your strategic roadmap.