Monetize Your Cost Center: DevOps West 2020

Monetize Your Cost Center
DevOps West -June 8, 2020

@catherinelouis @mvizdos
Agenda
● Logistics and Intros
● Why we’re doing this
● What’s a Cost Center? Profit Center? Why?
● Your experience, good, bad
● What we’ve learned about cost centers vs profit centers
● 4 Tools to help you monetize your cost center
● Final aHaa in a jamboard

Introductions with a “Zoom Fatigue” tip!
● The cognitive dissonance of remote work: as humans we tend to want to
compartmentalize. We have “work” life vs “home” life, vs “play” life.
● In a remote setting this isn’t possible, we’re mixing it up. We get
interrupted, we double process, it’s….exhausting.
● A tip we’ve learned: Name / why are you here / share what grabs your
attention from staring at the screen
● So with that in mind, share your name, why you’re here, and something
that captures your attention (you may expect to be interrupted by it) from
your home life.

Why we’re doing this session
● Because we’re tired of hearing (from sooooo many people):
“drain on profits”
“burden to the P&L”
“overhead”
“just a back office function”
...

● Think about it: what would happen if you eliminated a cost center from any given
organization?
○ HR?
○ Marketing?
○ IT?..
● What would happen if your cost center was about to be eliminated?

● Because we’re tired of hearing something like this:
“I’m working on a Priority 1 customer report which speeds up transaction time.”
● When really, after some discussion we discover that:
○ You’re really working on delivering NEW value for the customer, a brand
new feature request which allows for loan requests to be processed 9 times
faster, with minimal human intervention, and all requested via a bug report
(which could have been requested as a value-added feature.)

Cost Centers: What are they?
Cost Centers are units within companies which
contribute to a company’s profitability “indirectly.”

Cost Centers: What are they?
A Cost Center is a department or function within
an organization that does not “directly” add profit,
and costs the organization money to operate.
● production departments
● service departments
● administrative departments
● IT
● accounting
● what else?...

Exercise 7 min, then readout:
Jamboard 1: Your thoughts of benefits / disadvantages of cost centers?

Cost Center: Disadvantages
● Being in a cost center can feel like the dog wagging the tail.
You’re not part of the team bringing in the revenue, you’re
“consuming resources”.
● When the business performs well, it’s rare you are included
in getting the credit.
● When the business performs poorly, cost centers are
quickly positioned for cuts.
● Asking for equipment to make you more effective requires lots
of time and effort to make a case.

Profit Center: What is it?
A Profit Center is part of a business which is
expected to make an identifiable contribution to the
organizations profits.

Profit Center: What is it?
● Profit Center leaders are held accountable for revenue
and expenses, thus for profits.
● It’s like running an independent business because a
profit center unit is as a distinct business entity which
enables revenues, determines expenses, thus allowing
profitability to be measured.

Profit Center: Some aHaaa history
● Peter Drucker originally coined the term profit center around 1945.
● He later recanted, calling it "One of the biggest mistakes I have
made". He later asserted the following:
○ “Inside an organization there are only cost centers. The
only profit center is the customer whose check has not
bounced.”*
* (Drucker 2002: 49, 84)

Exercise 7 min, then readout:
Jamboard 2: Your thoughts of benefits / disadvantages of profit
centers?

Profit Center: Disadvantages
● Decisions made solely on the basis of profit versus purpose and
being socially responsible
● Comparison of profit centers within a company causes competition
● Data accuracy can be a problem: decisions made on data that is
correct reflecting a current and true view of profitability
● How are indirect costs handled? Company divides up indirect costs
to profit centers - how is this allocation decided?

Lines can be blurry...
● Software development projects are typically capitalized until they
reach “done”, and then turned over to production and maintenance.
● What happens when an organization adopts continuous delivery
practices?
● It’s no longer clear when software development should be capitalized
or not, (which can also have tax consequences). * We are not accountants.
● It is valuable for you to make friends with your organizational financial
accounting team to uncover, or discover, the blurriness between the
lines.

Tools to help you monetize your cost center

Who is the closest to the customer?
● If you’re supporting the business this could be you! Recognize the power of this: you know better than any arm of
business where the customer’s pain points are. Turn those bug reports into an opportunity to add value to the customer
and the company!
● How? Example: Research top 100 defect / bug reports, then:
○ Affinity group
○ Next do some analysis: Run analysis, 5 Whys, Fishbone etc.
○ Ideate for possible solutions
○ Prototyping
○ Finally, propose the solution to the business and the customer with a demo of the prototype, including projection of
$ save processing future incoming bugs and $ benefit if customer chooses the solution. * Your new accounting friends will help!

How are you closest to the customer?
Jamboard 3: How could you get even closer to the customer?
7 minute brainstorming

Make an impact to the bottom line by
● Streamlining process(es) - continuous delivery
● Renegotiating terms with suppliers - partner with them
● Working smarter - focus on outcome over output
● Beware of process as a proxy: “just make sure we’re doing the
process right” instead of focusing on the results we want

7 minute brainstorming: how might we make an impact to the bottom line
Jamboard 4:
● Streamlining process(es)
● Renegotiating terms with suppliers
● Working smarter
● Beware of process as a proxy: “just make sure we’re doing the
process right” instead of focusing on the results we want

Invent Revenue
● Lease excess capacity / inventory / building space
● Reclaim equipment, refurbish, lease
● Examples?

7 minute brainstorming: How might you “Invent Revenue”
Jamboard 5:
● Lease excess capacity / inventory / building space
● Reclaim equipment, refurbish, lease
● Examples?

Support Strategy: Play an active role helping sell products and services
● Play an active role in strategy and help the company sell more of its
products and services.
● Brainstorm how could you and your coworkers do your jobs differently,
so that your company becomes more appealing to customers?
● Can you improve quality, price, service or speed?
● Make your company more relevant to customer demands (which makes
the competition less relevant), and the result will always be more sales
revenue. *Again…. Your accounting friends can help!

Support Strategy: Play an active role helping sell products and services
● Find the value for the customer in what you’re doing today:
● Quicker response times
● Higher quality
● Deeper expertise
● Greater flexibility
● More consistent and predictable outcomes

7 Minute brainstorming: How might you play an active role helping sell products/
services?
Jamboard 6:
● What other ways can you find the value for the customer in what you’re
doing today?

Closing the session - retro of the retro
! What’s the ONE big takeaway?
What do you want to learn more about?

Please keep in touch! Really!
Call / text / email us ANY TIME for help!
Mobile: +1.919.244.1888
Email: cll@cll-group.com
Twitter: @catherinelouis
Web: cll-group.com
LinkedIn: www.linkedin.com/in/catherinelouis
Mobile: +1.619.709.1716
Email: mvizdos@vizdosenterprises.com
Twitter: @mvizdos
Web: vizdosenterprises.com
LinkedIn: www.linkedin.com/in/mvizdos

Monetize Your Cost Center: DevOps West 2020

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