Here’s the scene: An IT team at a major manufacturing company is working on a new version of the systems that support the order-to-delivery production planning and material supply processes. They are discussing the order amendment process included in the functional requirements. Just making naïve and imaginary guesses at the cost of this feature, and assuming an hourly cost of the participants of $100, and a total of 8 participants at any given time, you have:
Interpreting the requirements - 3 hours, $2,400
Examining and discussing the process in the current system - 4 hours, $3,200
Arguing - 2 hours, $1,600
Making diagrams and stuff - 4 hours, $3,200
Reviewing diagrams and stuff - 2 hours, $1,600
Changing diagrams and stuff - 4 hours, $1,600
Making use cases - 10 hours, $8,000
Presentations to managers - 2 hours, $1,600
Changes - 4 hours, $3,200
Making test cases - 10 hours, $8,000
Nuts and bolts programming - 500 hours, $400,000
Reviewing, evaluating,changing, testing - 500 hours, $400,000
Documentation and user training - 500 hours, $400,000
Working with end customers - 0 hours, $0
Asking why the order amendment feature is needed - 0 hours, $0
Assessing frequency of orders amended - 0 hours, $0
Looking at the data - 0 hours, $0
Deciding on the wisdom of including the feature - 0 hours, $0
Total - 1041 hours, $1,232,800
One renegade team member downloads actual orders to see how often orders are amended - 3 hours, $300
Orders are amended 3 times in 6 months.
Option – orders that need to be changed will be canceled and reentered.
Decision – orders that need to be changed will be amended, since no one can be bothered with considering any real data.
The cost of the decision is more than $1 million, a drop in the bucket on the larger scale. But added up on the large scale of thousands of similar decisions and pretty soon, you’re talking about real money.
Anyone could look at this story and quibble about the number of hours, the work that would be included in developing the order amendment feature, and the probable actual cost, but I’d bet the fact would remain. Millions of dollars are burned like this every day, just because people are sitting in their cozy team rooms in their ivory towers, not wanting to be confused by any real data.