Developers - Cost or Asset?

When things get big enough there might be functional silos that concentrate on specific activity. These could classically be something like sales, development, support and marketing. Of course these functions should be made as efficient as possible taking into account the whole. Customer value is usually built in co-operation between all the functions, not by a single unit.

Metrics can be a double-edged sword, if they are applied to functions instead of taking into account the whole value chain. Sales funnel is quite easy to quantify. You have numerable amount of possible clients. You can count how many units you can sell to this market, thus getting the absolute limit value for your cash inflow. It's easy to measure how much a single sales person or sales unit can close deals and bring in money.

If you sell development hours, it's also quite easy to measure how much a developer generates turnover or how big the billing rate is.

In typical cases salaries are even easier. There's usually a fixed sum of money that is paid to the person monthly. This is the cost of a developer (plus hardware & licenses too).

But it’s much more difficult to quantify the financial benefit of an in-house developer who works in R & D. One could make a rough estimate about how much an equivalent consultant would cost. But this doesn’t take into account the subtle knowledge that is accumulated over time or the internal relations. Possibly this person is the glue that keeps the team together, the humorist that keeps people in high spirits or the oil that lubricates the internal cogs and makes things happen. Not impossible, but difficult to quantify.

Without visibility and understanding, one can draw wrong conclusions about the situation. Classic would be rewarding sales department for bringing in the money and cutting costs in operations by sacking people.

 

"What should I do then?"

To remedy the silo problem and optimizing parts in expense of the whole, you should concentrate on metrics that measure the whole value chain and are difficult to gamble. Some examples:

• NPS. How the customer experienced your service?
• Lead time. How long it took your organization to meet the customer’s need?
• Profitability. Do not concentrate on (just) how much sales you make. Pay attention to how much it costs for you to develop, deliver and market the product/service.  

 

 Photos by "My Life Through A Lens", Spenser H, Fabian Grohs and Mike Wilson on Unsplash.