Traditionally, IT managers manage the spending of labor, hardware, and software separately. This traditional management approach has a major drawback. That is, it overlooks the cannibalization effect between labor and productivity software. Productivity software reduces spending, whereas improving productivity and quality. Productivity software should be considered with your labor management.
Let me define the “productivity software” first. A software is a productivity software, if it enables the productivity and quality improvement of labor with less cost. The functions of a productivity software are usually labor tasks, such as time sheet management, user account management, database ETL (Extraction, Transformation, and Load) process, and others. For example,
Companies are spending 50k-90k each to hire ETL developers requiring skills of SQL, Oracle, SQL server, MySQL, Java, C#, PHP, or ASP. These developers usually are highly skilled people and involve a lot of programming and training. Both the labor cost and ETL process maintenance cost are high to support the ETL process, whereas the productivity depending on the number of developers, their skills, and their work hours. On the other hand, an ETL tool, like Talend, allows people with basic programming skills to develop ETL procedures on the fly with just drag-and-drop of icons in its graphical user interface. It allows people to update and maintain the developed ETL procedures very easily. It not only compiles your design into codes immediately, but also creates the documentation of you design altogether. With the help of such productivity software, it can cut your labor cost in half and improve your work quality significantly.
The help desk usually requires people working 24 by 7 in order to provide technical support, troubleshooting, and user account management. The user account management involves creating new accounts, setting and changing account access, resetting passwords, and terminating accounts. These help desk people work around the clock to keep company people have continued access to their IT systems. But, as a company grows with increasing number of systems and increasing complexity of user account management due to different user account structures of those systems, it becomes an error-prone process to manage user accounts effectively and efficiently. A productivity software, like Tools4ever or other user provisioning software, provides the automation of user account management with around 20k for 2,500 users. The cost is much lower, and the productivity is much higher than hiring regular labor. In addition, the software ensures the accuracy and reliability of user account management required by government regulations and industrial standards such as SOX, SAS70, HIPAA, and ISO-9002.
The productivity software replaces the labor or allows people to focus more on decision-making or planning tasks. It ensures 24×7 service availability to companies and organizations. It maintains accuracy and reliability.
However, when companies plan their software spending separately from their labor spending, they usually try to reduce software spending to control cost, whereas hiring more people, when companies grow. Such decision-making overlooks the cannibalization between labor and productivity software. If an ETL software costing about 35k and requiring less skilled workers, I would buy the software instead of hiring more people. If a user account management software costs 20k and ensures the accuracy and reliability of all user accounts, I would buy the software and eliminate the overload of my help desk people. An additional benefit of software is that, for most cases, the annual cost of licensing is usually only 20% of the license purchase cost in the first year. So, the annual cost of keeping a software up to date is way much less than labor, which requires annual pay raise. If IT managers consider the spending of labor and productivity software together, they would keep the combined cost low by spending more on productivity software spending and keeping labor spending at constant or less to support the growth of companies. The result of such mind-set change would reduce cost, improve quality of data and work condition, and improve productivity.
Therefore, I recommend combining the labor cost with productivity software. My IT total head count would include the total labor and the number of my productivity software. My labor mix would be the percentage of “software” head count over the total head count. And, I would expect my IT support and service level to grow exponentially with the increasing of the labor mix. If you follow the traditional approach, you will not be able to see such exponential growth opportunity at all.