Who cares about efficiency? (Part 1)

Adherence to the concept of efficiency is almost a religious conviction in our society.  Who wants to be inefficient?  Perhaps worse, who wants to be perceived as inefficient?  Business pundits laud economic efficiency, as they call out countries and businesses that should serve as role models for us all.  Throughout my career building IT management software my colleagues explained how our products saved money.  But how much do IT professionals really care about efficiency and act on it in their daily operations?  Is efficiency merely an intangible aspiration more than a daily reality?

The engineer in me wants to believe in efficiency and that users will utilize novel technologies that improve their organizations’ efficiency.  Who wants to waste time or money, after all?  The product manager in me wants to believe that productivity arguments and proof points will compel customers to purchase and implement products that boost efficiency.  Yet, it’s sometimes unclear how much of a priority this is in the data center infrastructure industry, with one report that 30% of servers are not even used.

A venture capitalist once asked if my product amounted to an aspirin or a vitamin.  The implication was that people tend to buy things that resolve pain, but are less likely to pay for longer term health.  (We were talking data centers, not personal care products where – I hope – health gets more credit.)  It’s a fair question because everyone has limited time and budget.  We’re more likely to prioritize today’s pain over tomorrow’s promise of improvement.  We may agree that efficiency is a good thing, but to what extent will we put our money behind positive aspirations?  United States consumers spent $376B on electricity in 2013, while electric utility efficiency budgets were about $7B that same year – a small fraction of the overall electricity market.

I’ve seen this battle for mindshare and priorities throughout my product management career.  My experience in data center automation software was a classic example of “invest now to gain future efficiency.”  We had many customers, yet others chose not to make that leap and continued with costly, time-consuming operations.  The degree to which efficiency wins the day depends on three factors.  How much will I save?  How much does it cost?  How easily can I implement it?

Knowing how much the customer will save and how much the product costs may at first appear objective and quantifiable, but they’re usually anything but clear.  Modern data centers and the applications running within them are mind-blowingly complex.  Efficiency pitches typically go like this: “Replace these pieces (or processes) in your data center with my product.  It will perform the same function while saving capital cost, power, operational overhead, and/or time.”

How much will I save?

These are lofty claims, but how to quantify?  Capital cost and commodities such as power are the most straightforward.  A customer can look at the cost to upgrade existing assets and compare with purchasing the new product.  Power can be measured as well.  There may be a small leap of faith that the replacement is sized appropriately for the task and that additional equipment or licenses will not be required to replace the existing asset.

Operational overhead and time savings are more murky.  Assuming ease of implementation is addressed (stay tuned), will my product require learning a new user interface?  Much has been written on how product managers can heavily influence their product’s user experience and ease-of-use.  Will the customer require ongoing integration with existing systems such as security, monitoring, or accounting?  These costs are real, contributing to multi-billion-dollar integration products and services that are growing rapidly.

This still doesn’t completely answer “how much will I save?”  While I can ask for the customer’s hourly labor rate and multiply by some number of hours saved, many employees are salaried and not compensated for additional time worked beyond a certain baseline.  Maybe employees are working through lunch, staying late, or checking in on the weekend.  Putting aside issues of pay and fairness, all hours are not accounted for equally and the purported time savings may not show up fully in the customer’s bottom line.  A common approach quantifies cost savings for existing customers and uses their data, with permission, as examples for others.

It costs…what?

In part 2 of this post, I’ll explore the costs and complexities that detract from efficiency claims and increase the customer’s burden to buy into the goodness we promise.  Send me your stories and feedback on how you’ve approached efficiency in designing and selling IT products.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s