Economic Value of A Process

I received and interesting email from Tony Bonn.  Where he suggested that processes have economic value.  Adam Smith argued a wealth of a nation is not based upon its amount of stored money or the total value of assets.  Instead a countries wealth is based upon its ability to produce goods and services.  Does this same concept hold true for an organization?

In the information age an organizations economic value is its ability to produce goods and services not just a summation of assets and cash.   Of course physical assets and cash are necessary, but not as necessary as the processes the organizations utilizes.  The argument goes like this, the better the process the more an organization can produce.  Those organizations with the best processes in place are able to produce the highest value of goods and services. The process, the how, is more important in developing software than the physical assets used to create software.

It seems logical a certain amount of value needs to place on the processes of an organization.  If a processes increases the book value of an organization it increases the stock value too.

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IT the toilet that never stops flushing

I was consulting for a large international firm and one of the executives on the business side made the comment that, “IT is the Toilet that never stops Flushing.” To often this is an accurate phrase to describe how money is spent in IT. Most of us have had a running toilet in our bathrooms and it can be very annoying. In the end a running toilet is just money down the drain and too often spending money on IT is money down the toilet too.

Over the past 20 years a lot of IT spending was done without careful cost benefit analysis.  Too many projects were undertaken because there was a desire to move to the latest and greatest technology.  The current recession is causing IT to really justify its spending.   The business is forcing IT to wiggle the handle to see if they can’t stop the water from running.

Even though the current fade de jour is build as you go or ad hoc software development it is an expensive proposition.  Those IT organizations that embrace, study, and learn  the core business are the same organizations with the highest productivity rates, best quality and lowest costs per unit.

Read more at Reboot! Rethinking and Restarting Software Development