What should be a CIO's top priority - cost or quality?
A very profound question with an equally profound answer - depends!
To say that either cost or quality is always the first priority would be incorrect. Cost is always a consideration, especially in the case of companies in the social domain, whose target segment is the poorest of the poor and the objective is to ensure maximum returns at both ends of the supply chain while being self-sustaining.
It is important to realize that normally high quality comes at higher price. But lower quality may increase total costs. The cost of poor quality or service is magnified not only in terms of trying to recover a project that is already damaged, but also in terms of loss of brand equity and trust. After all, the cost of quality is not only the cost of prevention of non-conformance and the cost of appraisal for conformance; it is also the cost of failure to conform.
For example: Cost of re-work, re-testing etc. This not only applies to product quality but also to IT service deliveries. Haven't we heard of many failed ERP implementations where companies have expended years and huge efforts to get back on track?
As I read somewhere
Work has three attributes - Good, Fast and Cheap. And only two of these three attributes can be true at any given time!
Fast and cheap can't be good; good and cheap can't be fast; and good and fast cannot be cheap!
But do you apply the same yardstick to every activity? For example, if the activity does not need specialist skills, do you really need to pay for specialist skills? In green field projects or services where new processes or technologies are being deployed, specialists with domain knowledge are valuable resources who can simplify the path to adoption for you. And as everyone in the IT industry knows, specialists come at a premium.
In my previous organization, the SAP deployment expertise vested with tier-1 partner but the interfaces development to legacy applications were awarded to a lower end application developer. Within the desktop segment for example, as long as I ensure that the machine reliability and service level feedback from the industry meets my expectations, cost would be a primary factor for decision making. Would I buy cheaper desktops with inadequate service levels just because of the cost factor? It is unlikely. This is because the indirect costs associated with the unhappy users, loss of productive time of the user and the IT support staff would far outweigh the one-time cost savings.
The challenge is easier when the cost versus quality paradigm is obvious. Experience and decision-making come into the picture when the quality differentiators are less visible; 'Unees-Bees ka Farak' (minor difference), as we say, but the cost factors are very varied. When you talk of networking equipment for instance, there are several brands with various price bands. While there is a very strong brand perception, it might make sense to deploy less expensive brands into less critical areas. Look forward to having a networking expert correct me on this!
I think, in any analysis, it is important to identify clearly the elements on which there can be no compromise. Once that is done, we need to ensure that any evaluation focuses on these elements and arrives at technically comparable options. Within these options, cost can be the singular deciding factor. Traditionally, the QCBS (Quality and Cost-based Selection) mode of vendor selection follows the above process to ensure that quality is obtained but at the right price.
Very rightly put. CIOs often get pressured by organizational processes to opt for the least cost quotation, but at times they incur costs which are several times higher. For example my last organization opted for the L1 partner and cried hoarse later. The project had to be abandoned 6 months later incurring a handsome amount as lost cost.
Nicely crafted little piece by Annie. As she concludes, there are no black and white answers. To me quality and ‘END COST’ appear very compatible. SO called low cost quality compromised systems can prove very costly in terms of ‘END COST’. Ans it is a high risk affair. So I guess weightage to ‘initial cost’ or quality will be decided by risk and consequence analysis.
Imagin cheap poor quality mission critical systems!!
Other then ‘Unees-Bees ka Farak’ , we also say, that nothing comes free. I personally believe that Quality and Cost are two sides of the same coin. We as Indian always work with both parameters in our day-to-day life. However, if we are not able to strike a balance between both then we need to pay a heavy cost for quality. I second Annie thought on that, good one…..
The points put across in favor of Quality, in its fight against Cost, are right. The criticality of the function / service should be the basis of a weighted approach for decision-making on products under procurement. Quality or Cost, which should have more weight will depend on the criticality, or security, levels to be addressed. As Ms Annie say, Unees-Bees-Ka-Farak makes it difficult to choose between, or convince the Auditors. My submssion is that we should institute a weighted approach, like AHP, where Cost, Quality, Time, Support, Training, Budget etc. could be the parameters of concern. Sometimes, we may have to give Cost a higher weightage than Quality. Let Business / Operations take the call.
Thanks to everyone for the inputs.Yes, I agree that a complete TCO snapshot only would give the right comparative. May the right quality always come at the right price!! Cheers