IT Organization Circa 2017

This post picks up on Parts 1, 2, 3 and 4 and examines the fourth of Deming’s 14 Management Points, which urges:

End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust”

Total Cost – Not Price

I think this is a key point that is understood by most IT professionals, but not is necessarily understood by their business partners.

Why can I pick up a laptop at Best Buy for $400 but our IT department, with all its corporate buying power pays $1200 for the same machine?”

The notion of Total Cost of Ownership (TCO) is rarely considered but is clearly an important factor for any IT asset.  And while IT professionals apply TCO to assets such as PC’s, they less frequently apply it to legacy applications and software licenses – rarely “pulling up the weeds” as Prof. Peter Weill at MIT’s Center for Information Systems Research likes to say.

Another aspect of Deming’s 4th point is the notion of a limited number of focused relationships based upon loyalty and trust.  The early days of the Total Quality movement really pursued this goal, and, I believe, mostly with a positive impact.The most successful supply chain optimization efforts incorporated customers and suppliers, and ensured that all parties shared in the benefits.  More recently, business competition has often taken on a more selfish and short sighted “every man for himself” tone, and I’m not sure that this has been helpful to the global economy.

Much has been written lately about the importance of trust – its fragility – and how difficult it can be to earn back trust once it has been lost.  This plays out in supplier-customer relationships, employer-employee relationships, and, of course, politician-citizen relationships.

What are you doing to preserve or rebuild trust?  Are you focused on a limited number of long term, mutually beneficial relationships, based on loyalty and trust?

Image courtesy of Retail Service Company

Filed under: General Tagged: | Supply chain, Total Cost of Ownership, Total Quality