4 ms·

IT is a cost center and very expensive.

xxpor 5y ago
This is fundamentally what Europe especially and some non-tech large US firms don't get. Repeat after me: software development *is not* IT. IT is the department that hands out laptops and buys office licenses from MS. Software Engineering is a product development group. They're two entirely different functions. IT can make sense to have under the CFO, but product development almost never does.
- walshemj 5y ago
  Not everyone makes that hard distinction
  - xxpor 5y ago
    And that's the problem!
- 908B64B197 5y ago
  > IT can make sense to have under the CFO, but product development almost never does. Just get a CTO. But seriously, it's always hilarious to listen to non-tech companies pitch how they can pivot to becoming a "tech company just like Google" while following none of the practices in SV. Developers still working for "IT", cost cutting and penny pinching. No free food of course...
  - fallingknife 5y ago
    C_O's are expensive.
- austincheney 5y ago
  This is only true if you are a software company that makes money selling or servicing software. I work at a mega bank and we produce tons of software. It’s still a cost center, a means to an end. The only distinction I see is that software developers want to believe they are somehow more special than everybody else.
  - xxpor 5y ago
    I mean, everything is a means to an end to make money. Google isn't selling ad tech software, they're selling space on websites to advertise. The tech is just a means to an end for that. The companies that recognize this are the successful ones, and the ones who don't fail eventually. Even John Deere sees the light here. Why do you think they have all of the DRM BS? The value comes from the software.
- PeterisP 5y ago
  Most software engineers are employed in companies whose product is not software but something else; and their "software products" - which may consume many developers - is not a product, but workflow support for the people making/selling the actual product of the company.
orev 5y ago
That’s only if you take a naive view of IT (which most people do because it’s the lazy approach). Laptops, servers, networks, email boxes, etc. should all be charged back to the departments those are actually being provided to. When you do that, suddenly IT is making a lot of (internal) money, and the business can see where the costs actually are. IT is also not nearly as expensive as other types of businesses that require huge capital investment, like farming equipment, factory assembly lines, biotech reactors, etc.
- mason55 5y ago
  IMO, if you're going to charge everything back to the business units then you also need to provide some kind of consulting-style services, or best practices, or guidebooks, or something. Otherwise you lose a lot of your economies of scale because each business unit is trying to figure out the best way to do things. Or you end up with shadow IT all over the place because the BUs come up with cheaper but unsanctioned/unsupported ways to do things. You also need a way to objectively evaluate how IT is performing. If the business units are going to third parties because IT is unresponsive or overly "expensive" then the exec team needs a way to see that. When IT is responsible for the IT budget then they have incentive to minimize costs and it's easy to do budget reviews. When the business units have to pay that budget then IT acts as a monopoly with little incentive to improve service or reduce prices and it's much harder to find the shadow IT that's being implemented to get around bad internal IT. There's no one perfect answer.
  - orev 5y ago
    You make very good points. This kind of system only works with strong support from the CEO, where everyone is firmly “on the same team” and has designated positions to play (e.g. IT has to provide the IT stuff). Once you allow shopping around within the company or externally, you end up in a shitshow. It’s still better than the typical approach, where everyone is just angry at IT all the time “because they are such a drag with so many expenses”. Outside of the extremely dysfunctional cases, charging everything back to business units is at least the more honest approach.
- tomnipotent 5y ago

This is fundamentally what Europe especially and some non-tech large US firms don't get. Repeat after me: software development *is not* IT. IT is the department that hands out laptops and buys office licenses from MS. Software Engineering is a product development group. They're two entirely different functions. IT can make sense to have under the CFO, but product development almost never does.

walshemj 5y ago
Not everyone makes that hard distinction
- xxpor 5y ago
  And that's the problem!
908B64B197 5y ago
> IT can make sense to have under the CFO, but product development almost never does. Just get a CTO. But seriously, it's always hilarious to listen to non-tech companies pitch how they can pivot to becoming a "tech company just like Google" while following none of the practices in SV. Developers still working for "IT", cost cutting and penny pinching. No free food of course...
- fallingknife 5y ago
  C_O's are expensive.
austincheney 5y ago
This is only true if you are a software company that makes money selling or servicing software. I work at a mega bank and we produce tons of software. It’s still a cost center, a means to an end. The only distinction I see is that software developers want to believe they are somehow more special than everybody else.
- xxpor 5y ago
  I mean, everything is a means to an end to make money. Google isn't selling ad tech software, they're selling space on websites to advertise. The tech is just a means to an end for that. The companies that recognize this are the successful ones, and the ones who don't fail eventually. Even John Deere sees the light here. Why do you think they have all of the DRM BS? The value comes from the software.
PeterisP 5y ago
Most software engineers are employed in companies whose product is not software but something else; and their "software products" - which may consume many developers - is not a product, but workflow support for the people making/selling the actual product of the company.

orev 5y ago

That’s only if you take a naive view of IT (which most people do because it’s the lazy approach). Laptops, servers, networks, email boxes, etc. should all be charged back to the departments those are actually being provided to. When you do that, suddenly IT is making a lot of (internal) money, and the business can see where the costs actually are. IT is also not nearly as expensive as other types of businesses that require huge capital investment, like farming equipment, factory assembly lines, biotech reactors, etc.

mason55 5y ago
IMO, if you're going to charge everything back to the business units then you also need to provide some kind of consulting-style services, or best practices, or guidebooks, or something. Otherwise you lose a lot of your economies of scale because each business unit is trying to figure out the best way to do things. Or you end up with shadow IT all over the place because the BUs come up with cheaper but unsanctioned/unsupported ways to do things. You also need a way to objectively evaluate how IT is performing. If the business units are going to third parties because IT is unresponsive or overly "expensive" then the exec team needs a way to see that. When IT is responsible for the IT budget then they have incentive to minimize costs and it's easy to do budget reviews. When the business units have to pay that budget then IT acts as a monopoly with little incentive to improve service or reduce prices and it's much harder to find the shadow IT that's being implemented to get around bad internal IT. There's no one perfect answer.
- orev 5y ago
  You make very good points. This kind of system only works with strong support from the CEO, where everyone is firmly “on the same team” and has designated positions to play (e.g. IT has to provide the IT stuff). Once you allow shopping around within the company or externally, you end up in a shitshow. It’s still better than the typical approach, where everyone is just angry at IT all the time “because they are such a drag with so many expenses”. Outside of the extremely dysfunctional cases, charging everything back to business units is at least the more honest approach.
tomnipotent 5y ago