A Million Dollars Here, a Million Dollars There

A lot is on the line here: your project’s success, your stock options or profit sharing, your company’s survival, and even your job. Systems built for QA often require so much ongoing expense, in the form of operations cost, downtime, and software maintenance, that they never reach profitability, let alone net positive cash for the business (reached only after the profits generated by the system pay back the costs incurred in building it.) These systems exhibit low availability, direct losses in missed revenue, and indirect losses through damage to the brand.

During the hectic rush of a development project, you can easily make decisions that optimize development cost at the expense of operational cost. This makes sense only in the context of the team aiming for a fixed budget and delivery date. In the context of the organization paying for the software, it’s a bad choice. Systems spend much more of their life in operation than in development—at least, the ones that don’t get canceled or scrapped do. Avoiding a one-time developmental cost and instead incurring a recurring operational cost makes no sense. In fact, the opposite decision makes much more financial sense. Imagine that your system requires five minutes of downtime on every release. You expect your system to have a five-year life span with monthly releases. (Most companies would like to do more releases per year, but I’m being very conservative.) You can compute the expected cost of downtime, discounted by the time-value of money. It’s probably on the order of $1,000,000 (300 minutes of downtime at a very modest cost of $3,000 per minute).

Now suppose you could invest $50,000 to create a build pipeline and deployment process that avoids downtime during releases. That will, at a minimum, avoid the million-dollar loss. It’s very likely that it will also allow you to increase deployment frequency and capture market share. But let’s stick with the direct gain for now. Most CFOs would not mind authorizing an expenditure that returns 2,000 percent ROI!

Design and architecture decisions are also financial decisions. These choices must be made with an eye toward their implementation cost as well as their downstream costs. The fusion of technical and financial viewpoints is one of the most important recurring themes in this book.