Top 10 Lessons Learned as Director of Capacity Planning – #3

This entry is one in a series of Top 10 lessons learned by Ron Potter in his previous job as the Director of Capacity Planning at a Fortune 100 health insurance provider.

Change the Conversation

I can’t tell you how many times I have sat in front of my CIO or CFO and seen their eyes glaze over as I presented the IT costs needed to support a particular project. That is because business leaders dislike expenses. However they do like investments with a reasonable return. In order to break the “cost” pattern, we need to change the conversation from one of cost to one of investment.

Consider the following two statements:

1. We need to spend $1.5 million to support the additional sales invoice infrastructure.
2. By investing $1.5 million, we can support the new sales invoicing system and economies of scale as a result will reduce our IT cost per sale by 5%.

Which one would be more appealing to an executive? Probably the second one.

As you can see, by spending more time to frame the information, we can change the conversation to reveal the true business value of a project.

Another way is to give choices. Many capacity planners tell me their business leaders demand sub-second response time so they can improve productivity and thus the bottom line. I have yet to see a study from those business leaders that show they actually analyzed the different productivity gains from changes in response times and attributed savings to them. It is usually perception driving that conversation. I have pushed back on a few and discovered that the improvements are mainly being requested to satisfy a few high performing piece-work employees and the change will have little if any impact on the normal employee.

So giving choices transforms the decision from technical to business. For example, there could easily be a $5 million per year spread in delivering sub-second response and 5-second response. In the previous case, spending $5 million extra to satisfy a few workers will not recoup the expense any time soon, if ever. The business is better of giving the few high performers a bonus for their productivity and keeping the systems as-is. So by giving choices, you force the analysis and ensure a reasonable option is chosen.

Until the next post…

Ron