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Cost centers are generally unavoidable, they're aspects of the business where there is a well-defined target past which there's no meaningful ROI. Regulatory c
by Hermitian909 7y ago
Cost centers are generally unavoidable, they're aspects of the business where there is a well-defined target past which there's no meaningful ROI.
Regulatory compliance is a good example of this. Both you and your competitors must be compliant, but past reaching that state there's no additional value add. As a business, you're thus interested in keeping the cost of compliance as close to zero as possible, all cost cutting that does not break compliance is good for the company.
- 0x445442 7y agoBut even your example can be viewed as an unavoidable cost of doing business where the alternative is to not be in business. In other words there's a distinction to be made between regulatory compliance where you have no choice and automating payroll processing where you do have a choice. I think it's pretty clear we're talking about the latter and I would not categorize an internal software development team who's job is to make the business run more efficiently as a cost center, even though there's not external sales of their work products.
- marcosdumay 7y agoKeeping the cost of compliance small isn't the same as doing as little work into compliance as possible. More often than not, it's the other way around. Corner cutting doesn't work on any of the usual "cost centers", and most of them can be transformed into a differential.