Dimension: Finances
(Note: This is part of the “Dimensions of SCM Challenge” series.)
Financial constraints are a given in any enterprise. Financial challenges arise when an enterprise attempts to reduce or control costs, or manage expenses. Usually SCM involvement in financial challenges is second hand, responding to the first-hand actions taken by management. An obvious example is pressure to reduce headcount. If the SCM function requires one full-time worker for every 30 developers, then a project with 45 workers might have two SCM engineers. In a cost-reducing attempt, management may try to eliminate one SCM specialist. This is an example of converting one type of challenge into another. The financial challenge (payroll too high) is converted into an efficiency challenge (need more work from one worker). Financial challenge is unique in being directly convertible into any of the other forms of challenge. Similarly, you can convert nearly all other challenges into financial challenges by throwing money at them. (The “financial challenge” part comes from realizing that you can’t afford to throw money at them.)
Many of the other challenges listed will actually originate as financial challenges. If management outsources some parts of the project, the decision to do so may have been driven by financial challenges at the enterprise or project level. If you are stuck responding to events, by all means refer directly to the discussion of the particular challenges you are facing. But if you can see the financial challenge coming, you may be able to suggest alternatives before a particular choice is made. If your organization is better able to deal with schedule challenges than with geographic challenges, perhaps you can convince management that a slow release cycle with a smaller staff would be better (and less costly overall) than an experiment in outsourcing.
There is no direct way to address financial challenges via SCM. Instead, you must first convert the financial challenge into a challenge on some other dimension—increased efficiency, outsourcing, a slower development schedule (perhaps with many interim releases), etc. What you can do, and should do, is ensure that whoever is making the decisions is aware of the strengths and vulnerabilities of your team. As mentioned above, it is far better to convert a financial challenge into one that your team is well prepared to handle.
(This was published as part of “Dimensions of SCM Challenge: Capability and Finances” in CM Journal, Vol. 6, No. 2, February 2008.)