8 ms·

Developers are not cost centre. They are wealth creators.

by lukasm 11y ago

ucaetano 11y ago
For internal systems they are cost centers, since there's no revenue associated with them, even if they create wealth. Don't mix accounting and economics.
- demian 11y ago
  But if they create wealth, isn't the "cost center" label outdated?
  - marcosdumay 11y ago
    Well, both this label was always meaningless (not "outdated", as this would imply it was ever worth something), and all parts of a company are expected to create wealth. The reframing of the discussion as about competitive advantage is a good one.
  - ucaetano 11y ago
    No, "cost center" is an accounting term. "create wealth" is an economic term. One does not exclude the other.
    - demian 11y ago
      Thank you for the clarification.
- lsaferite 11y ago
  That seems a bit short-sighted though, no? Even if you cannot put an accounting profit line with them, they facilitate the profit of the other departments.
  - tharax 11y ago
    right, but then so does support - by making sure that your customers are happy and therefore recommend your brand and become repeat customers. so do your cleaners - by making the workplace a tidier building so that your other staff are more productive. every team ultimately is there to "facilitate" another team to work better and make more money. where do you draw the line?
    - nkassis 11y ago
      It's hard for cleaners to make a company more competitive and profitable by cleaning harder but it's not hard to see how better software can do so.
      - GFischer 11y ago
        Elaborating: both better software and better support can be competitive advantages. Better cleaning, not so much - it's just a cost/requirement of doing business . Some companies don't consider their software or developers to be sources of competitive advantage, and you should try to avoid those if your goal is to work on cool stuff and have better chances of making more money. Some people do like the challenge of maximizing operational efficiency and might get a good job that way, but it's harder and fraught with politics.
    - adamc 11y ago
      I think what you are showing is that generally accepted accounting practices may not be as revealing about the business as we would like. Operations that make the numbers look better may in fact harm your business. I don't think this is news, but it seems to often be ignored.
  - deleted 11y ago
    [deleted]
  - collyw 11y ago
    Of course, but that's not the way beancounters think.
- lukasm 11y ago
  Building internal tools can give the company enormous competitive advantage, became a product etc. You can't do it with cleaners. Using term cost centre is so damaging for the culture that it can kill the company.
  - ucaetano 11y ago
    Everything is a cost center, since costs must always be allocated. In this case, we're talking about something being only a cost center, since there's no revenue center associated to it. If you stop calling it "cost center" and decide to call it "pure awesomeness ninja center" won't make a difference, people will just attribute the same meaning to the new word. On your point on competitiveness, I completely agree, just like HR having awesome hiring and retention policies can do miracles for a company, even if it's just a cost center. Legal too, for any major corporation legal is just a cost center, but one that routinely saves the company from total obliteration. Being a cost center or a revenue center has no relation to the relevance of the people involved.
725686 11y ago
Don't Call Yourself A Programmer, And Other Career Advice: http://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-programmer/ http://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-pro...
deleted 11y ago
[deleted]
jrs235 11y ago
While developers create software assets and therefore create wealth, its important, as an individual developer, to work on assets that have a higher multiplier of profits. Working for an insurance company on an internal system that helps agents sell and manage policies reduces costs by eliminating assistant and clerk positions and streamlining the process to save time. The development team working on such a project is working on reducing costs. This type of project is about lowering the floor (to increase profits, the more space between the floor and the ceiling the more profit). A development team working on a software product that is sold is focused on adding as value to the product so that the company can charge more for the product, increasing sales and profits. This type of project is about raising the ceiling. Ideally you want to be raising the ceiling, not lowering the floor. You can only lower the floor until you're on the ground (you can only reduce your costs/expenses to zero). If a company is focused on lowering the floor (reducing costs), they are interested and focused on removing YOU too (you're a cost). If a company is focused on raising the ceiling (increasing value and sales), they are more likely to see money spent on software development as an investment and are focused on making you more productive so you can add more value. Work on a project that raises the ceiling not lowers the floor.
- jbergens 11y ago
  But selling software to others is usually to allow them to save money, they are lowering their ceiling and might approach the bottom some day. And then there is competition. When you have a lot of it it won't be possible to charge any amount and someone might say that from now on you are going to focus on the low end of the market which means less focus on new advanced features. For internal systems it is usually very hard to stop using them after a while and there is also often a lot of things to develop in the systems. That means you are still contributing to the company. Stopping all development of internal systems might be very expensive.

Developers are not cost centre. They are wealth creators.

by lukasm 11y ago

Developers are not cost centre. They are wealth creators.

For internal systems they are cost centers, since there's no revenue associated with them, even if they create wealth. Don't mix accounting and economics.

demian 11y ago
But if they create wealth, isn't the "cost center" label outdated?
- marcosdumay 11y ago
  Well, both this label was always meaningless (not "outdated", as this would imply it was ever worth something), and all parts of a company are expected to create wealth. The reframing of the discussion as about competitive advantage is a good one.
- ucaetano 11y ago
  No, "cost center" is an accounting term. "create wealth" is an economic term. One does not exclude the other.
  - demian 11y ago
    Thank you for the clarification.
lsaferite 11y ago
That seems a bit short-sighted though, no? Even if you cannot put an accounting profit line with them, they facilitate the profit of the other departments.
- tharax 11y ago
  right, but then so does support - by making sure that your customers are happy and therefore recommend your brand and become repeat customers. so do your cleaners - by making the workplace a tidier building so that your other staff are more productive. every team ultimately is there to "facilitate" another team to work better and make more money. where do you draw the line?
  - nkassis 11y ago
    It's hard for cleaners to make a company more competitive and profitable by cleaning harder but it's not hard to see how better software can do so.
    - GFischer 11y ago
      Elaborating: both better software and better support can be competitive advantages. Better cleaning, not so much - it's just a cost/requirement of doing business . Some companies don't consider their software or developers to be sources of competitive advantage, and you should try to avoid those if your goal is to work on cool stuff and have better chances of making more money. Some people do like the challenge of maximizing operational efficiency and might get a good job that way, but it's harder and fraught with politics.
  - adamc 11y ago
    I think what you are showing is that generally accepted accounting practices may not be as revealing about the business as we would like. Operations that make the numbers look better may in fact harm your business. I don't think this is news, but it seems to often be ignored.
- deleted 11y ago
  [deleted]
- collyw 11y ago
  Of course, but that's not the way beancounters think.
lukasm 11y ago
Building internal tools can give the company enormous competitive advantage, became a product etc. You can't do it with cleaners. Using term cost centre is so damaging for the culture that it can kill the company.
- ucaetano 11y ago
  Everything is a cost center, since costs must always be allocated. In this case, we're talking about something being only a cost center, since there's no revenue center associated to it. If you stop calling it "cost center" and decide to call it "pure awesomeness ninja center" won't make a difference, people will just attribute the same meaning to the new word. On your point on competitiveness, I completely agree, just like HR having awesome hiring and retention policies can do miracles for a company, even if it's just a cost center. Legal too, for any major corporation legal is just a cost center, but one that routinely saves the company from total obliteration. Being a cost center or a revenue center has no relation to the relevance of the people involved.

725686 11y ago

Don't Call Yourself A Programmer, And Other Career Advice: http://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-programmer/ http://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-pro...

deleted 11y ago

[deleted]

jrs235 11y ago

While developers create software assets and therefore create wealth, its important, as an individual developer, to work on assets that have a higher multiplier of profits. Working for an insurance company on an internal system that helps agents sell and manage policies reduces costs by eliminating assistant and clerk positions and streamlining the process to save time. The development team working on such a project is working on reducing costs. This type of project is about lowering the floor (to increase profits, the more space between the floor and the ceiling the more profit). A development team working on a software product that is sold is focused on adding as value to the product so that the company can charge more for the product, increasing sales and profits. This type of project is about raising the ceiling. Ideally you want to be raising the ceiling, not lowering the floor. You can only lower the floor until you're on the ground (you can only reduce your costs/expenses to zero). If a company is focused on lowering the floor (reducing costs), they are interested and focused on removing YOU too (you're a cost). If a company is focused on raising the ceiling (increasing value and sales), they are more likely to see money spent on software development as an investment and are focused on making you more productive so you can add more value. Work on a project that raises the ceiling not lowers the floor.

jbergens 11y ago
But selling software to others is usually to allow them to save money, they are lowering their ceiling and might approach the bottom some day. And then there is competition. When you have a lot of it it won't be possible to charge any amount and someone might say that from now on you are going to focus on the low end of the market which means less focus on new advanced features. For internal systems it is usually very hard to stop using them after a while and there is also often a lot of things to develop in the systems. That means you are still contributing to the company. Stopping all development of internal systems might be very expensive.