Dear CIO: Here's What Your Budget Isn't Telling You

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Graham Neray
February 26, 2014
Category: Business

The CIO is asked to do a lot: keep the network humming; secure the business from the Syrian Electronic Army; wrangle with gnarly vendors.

But one demand stands above them all: cut costs.

Most CIOs look in the obvious places -- replacing mainframes with commodity hardware; finding workloads they can migrate to the cloud; virtualizing and consolidating. Many CIOs evaluate where they can replace commercial software with open-source alternatives.

We applaud them.

While these efforts help trim the IT spend fat, they have little if any impact on one of the largest line items of all: staff. Said differently, CIOs should continue to pursue these initiatives, but might consider prioritizing efforts that make their staff more productive, since those efforts should move the needle more.

This wasn’t always the case. In 1985, a gigabyte of storage cost $100,000. Today, it costs $0.05. In other words, it used to make sense to spend a lot of time optimizing for your hardware.

By contrast, developer salaries averaged $28,000 per year in 1985. Today, developers are the new kingmakers, and they’re paid accordingly -- to the tune of $90,000 per year.

Read: today it makes sense to optimize for developer productivity.

Storage and Developer Cost: 1985 vs. 2013

Consider how this affects project costs. Take a sample project in 1985. Let’s assume in 1985 we need 5 GB of storage and we have 2 full-time developers devoted to the project. In 2013, we assume a generous 5 TB of storage and the same 2 FTEs working on the project. We take a 3-year view of cost. This is what the balance of cost looks like between storage hardware and developer salaries in 1985 and 2013.

Storage and Developer Cost as % of Total: 1985 vs. 2013

In 1985, it made sense to optimize for storage costs. Today, the cost of storage is a throwaway compared to the cost of development.

In fact, the inventors of the relational database performed this calculation, too. Given the high cost of storage in their time, they made a tradeoff. They optimized the database for storage. Developer productivity, ease of use, agility -- these were deprioritized, and rightly so.

Today, developers are at a premium. They comprise the lion’s share of cost relative to storage. When we built MongoDB, we optimized for developer productivity.

And we’re not the only ones out to improve developer productivity. There are code collaboration tools, like GitHub. Platforms-as-a-Service, like OpenShift and Cloud Foundry. And better approaches to building apps, like agile methodologies.

What your budget isn’t telling you is that old technologies are driving up your cost of development. When you budget for 2014, what are you optimizing for?

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