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.