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Watch out for the Costs of Technical Scope Creep

Dec 29, 2016

What is today’s latest technology for business?  Ask 10 people and you could easily get 10 different answers, but no doubt it will be some form of application, product or service, or a combination, (known as a solution) that claims to enable your business to work faster and smarter, to transform and disrupt the status quo -  to deliver undreamed of results and more!

The trouble with today’s technology is that it’s only sensible to expect there will be something even better, faster and more disruptive on sale tomorrow! 

So technologists within businesses have to weigh up the pros and cons of each idea very carefully before they commit and when somebody significant enough in the technical team – possibly the CTO – decides that they should take a new initiative, they carry out market due diligence by issuing a Request for Proposal (RFP) to the leading providers. It becomes a sort of solution beauty contest really. 

Now technologists love their tech and will always see immediate benefits very clearly. However, they’re not nearly as good when it comes to long-term operating costs.  Understandably, large enterprises try to solve this problem by employing dedicated procurement professionals, who are skilled at negotiating terms and prices. 

Once the most beautiful products and services have been reduced to a “short list” from a technical perspective, it’s down to the procurement department to roll up their negotiating sleeves. 

Each of the solution providers are duly told they are at least 2 or 3 times as expensive as they need to be and are encouraged to “sharpen their pencils” if they want to win the business.  The vendors that care about their operating margins sometimes lose out at this point to those that kid themselves that this will just be a “loss leader”.

Anyway - Finally, the business chooses a winner. The contract is signed and the deployment begins, followed, eventually, by what all hope will be “business as usual” – the ongoing use of the service. 

By this time the procurement department have dealt with 20 more projects and the technical team are itching to come up with creative ways to exploit their new toys. 

But this is where the Technology Expense story actually begins – not ends.

Let’s consider IoT – the internet of things.  Every industry sector is embracing it.  It is widely predicted that trillions of IoT devices will be connected over the coming years.

But just like there’s no such thing as a “free lunch”, there is no such thing as a “free connection”. Somebody somewhere is paying for the installation and maintenance of the underlying IoT infrastructure and remember, this is new technology that changes and gets upgraded all the time. 

Even the underlying transmission systems for cellular connectivity change every couple of years (2G / 3G / 4G / LTE / 5G…)

So we put all our connected devices in “pooling plans” where they share a “pool” of bandwidth - as that sounds sensible. 

But that was before the tech guys discovered they could also return the average motor speed, or the ambient temperature data, the wind speed and with their new hi-res camera system they could even count the number of drivers going past each lamppost wearing hats!  Oh and by the way they need that hat data every 30 seconds, not just once an hour – which was how the pooling plan bandwidth was first calculated.  Let’s just call this “technical scope creep”

Now the overage charges (money we have to pay when we exceed our pooling plan data limits) due to the technical scope creep have blown our annual budget for the project in a single month!

Oh dear.  Why didn’t we catch that – couldn’t we have seen that coming?


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Written by Ben Mendoza

CEO & Founder of MDSL