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The Art of ‘Ware (V 2.0, maxim 2:1): budgeting for IT staff

March 24, 2008 0 Comments

[From The Art of ‘Ware (Version 2.0) by Bruce F. Webster (forthcoming), Chapter 2, “Supporting Development”]

A parable in the Bible talks about counting the cost of something before you start to build. That truth is ancient and obvious, yet I’ve seen too many companies ignore it. Once you know what you want to do, you have to figure out how to do it — and particularly how much it’s going to cost. Resources required include people, money, time, mindshare, technology, and information. They are all expended as development proceeds, and not all are renewable.

Sun Tzu talks in his second chapter about the resource issues of mobilizing troops, and waging war. What’s important, he says, is to succeed as soon as possible; the longer things drag out, the worse the results, regardless of how much “better” the product. If you don’t believe me just ask anyone (else) who has shipped a product a year late.

Product development requires a core development team, support, and quality engineers, and the necessary resources from production and marketing.

It is still possible for an outstanding concept, technology, or product to originate with a few people working in a garage or cheap office; just look at Google. What is almost impossible is for those same few people to bring the product to market on their own. Customer expectations of quality — in marketing, packaging, documentation, customer support, and, or course, the product itself — are at a very high level, and there are a lot of fiercely competitive companies that can provide that level of quality.

The cost of supporting these employees for 18-24 months, including salary, training, travel, marketing, and money spent on equipment, office space, utilities, and supplies, will amount to roughly $15,000 per month per person. Such is the price of new product development.

This figure is less in some places with lower wages and cost of living. And, of course, things can be done a bit cheaper in a start-up, particularly if the developers are fresh out of college. But that $15,000/month figure — about $180,000 per year– is a good, conservative rule of thumb, especially for business planning. The general rule is to take the annual salary of that employee and double it. IT salaries, after booming in the late 1990s, were hard hit by the tech collapse of the early 2000s. However, they are on the rise again. Plus, not all your salaries are going to be IT-related; there will be non-IT employees as well.

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Compare suntzu pingfa (Chapter 2: “Doing Battle”):

Generally, the requirements of warfare are this way:

One thousand quick four-horse chariots,

one thousand leather rideable chariots,

one hundred thousand belted armor,

transporting provisions one thousand li,

the distribution of internal and on the field spending,

the efforts of having guests, materials such as glue and lacquer,

tributes in chariots and armor,

will amount to expenses of a thousand gold pieces a day.

Only then can one hundred thousand troops be raised. (Sonshi translation)

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Filed in: Art of 'Ware, Books, Hiring, Main

About the Author:

Webster is Principal and Founder at at Bruce F. Webster & Associates, as well as an Adjunct Professor for the BYU Computer Science Department. He works with organizations to help them with troubled or failed information technology (IT) projects. He has also worked in several dozen legal cases as a consultant and as a testifying expert, both in the United States and Japan. He can be reached at 303.502.4141 or at bwebster@bfwa.com.

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