Stop Treating Technology as a Demand Function
Over the past few years, I’ve noticed that organizations have adopted the word demand to describe technology work requests. The use of the word demand is a troubling one because it implies an expectation that when demand is presented, it will be fulfilled. Demand is an output mindset, which means that your business partners aren’t looking at how hard it might be to fulfill their requests nor the capacity limitations and challenges those place on the technology delivery capability. They submit a demand request and then technology is expected to figure it out.
When we think about demand from a manufacturing perspective it’s a production line that satisfies the demand as it comes in. The production line is optimized to deliver the output of orders received as quickly and efficiently as possible. The orders coming do not require that the production line is continually optimized for the order being produced, there is tight alignment between products sold and the way that they are fulfilled.
And in this setting when demand increases, we have a couple of options to address it:
a. Add more capacity
b. Work longer hours
Adding more capacity can be simply working longer hours on the production line. It can also mean adding additional production line capacity, this would be considered if demand is expected to remain high for a longer period.
When considering adding physical plant capability to raise capacity, there is an investment equation from capital finance that will provide us input as to whether this will be a good investment. The key here is that the flow of orders (demand) is the same with both production lines and the people skills needed remain the same as well.
Let’s look at how a demand approach to planning in a technology environment would look. The first important issue to contend with is that the technical environment that we work in is extremely complex and looks nothing like a production line, though business leaders I think view it that way. So, unlike a manufacturing production line where everything is optimized for the output of the products, software development can’t be optimized in this way. There are simply too many variables across myriad applications and systems each requiring specific skills.
In looking at adding capacity in a technology environment we can first ask our people to work longer hours. There is clear evidence that when people in a technology environment work longer hours, their productivity and quality will decline.
Adding capacity in the form of new teams also comes with challenges especially if these new teams are attempting to work in the same area of the product that other teams are, dependencies and handoffs go up exponentially, which lower productivity and quality. Seeing a theme?
In order to effectively manage technology planning and flow, we must first start with establishing a product capability portfolio strategy that is aligned with quantifiable value outcomes. With value clearly defined we can begin to have the necessary conversations regarding what is the most effective and efficient way to deliver that value.
Instead of using demand language, we need to move toward an investment mindset and language. Making an investment will change how we think about what we are asking for. Investments are things we make that deliver long-term value, which will cause us to approach spending money differently. Investments are associated with outcomes and if the outcomes are lower than the cost to invest, we aren’t likely to move forward with the purchase (we shouldn’t).
Thinking of technology as a demand function, we skip the value conversation and instead wait in line until our demand is satisfied, much like sitting in line at a fast-food restaurant.
