Jevon’s Paradox and IT

I came across Jevon’s paradox the other day (can’t remember where) and it connected with me on something I’ve been thinking about the last few weeks. Jevon’s paradox, from Wikipedia says:

In economics, the Jevons paradox (sometimes Jevons effect) is the proposition that technological progress that increases the efficiency with which a resource is used tends to increase (rather than decrease) the rate of consumption of that resource.

While not a direct application of this paradox or effect, it seems to me that a similar effect happens with IT work in a group, department or company.  Namely, no matter how much good work is done in that area, there will be still be a list of additional work to do the next time period. If you manage your portfolio of work by organization, no matter how much you do for that organization in a year, there will be a similar list of work to do the next year. No matter how much you do or how much better the organization gets, there will be a list of improvements to undertake next year.

This ‘infinite’ amount of work is one of the key problems in IT and why always working on improving portfolio management is a critical priority for IT leadership and the business. The IT leadership team has to be constantly working with business partners, customers and suppliers to make the smartest decisions possible about what to work on.  The amount of work is infinite so being busy or having a lot to do is meaningless. What counts is working on the right things.

I’m also thinking that this effect is causing me to pause and re-think some of my ideas or beliefs about how that portfolio management should be done. Perhaps, for parts of the business, you tightly constrain the resources available to work and let the most important or highest ROI type work bubble to the top. Then, divert the large fraction of your resources to work on the truly strategic part of your business. I have to think on this more.

I’d welcome your thoughts on the matter.

5 thoughts on “Jevon’s Paradox and IT”

  1. Mark, maybe I’ve been in large corporate IT for too long, but take for granted the need for a strong PMO because IT is a shared and limited resource and in need for business prioritized work focus. Working on the right things is a given. Now how effectively an organization can determine what are “the right things” seems to determine how much value a company gets out of their IT organization.

    I got to work briefly for a mid-size company that had recently switched from a “do whatever the business asked” to a PMO prioritized approach (at the same time the IT head count was reduced due to the recent economic downturn). What was interesting was all the “work” that was in-flight prior to the forced prioritization that was just dropped … without any noticeable business impact. The company could have just as easily switch their IT delivery model and staffing 1, 2 even 5 years earlier and probably saved $$$ and still met their business objectives.

  2. Thanks John. Yes, it seems like a core activity. I think of it as a core responsibility just like security and business continuity responsibilities. I’ve also found that some of the research groups in IT don’t really think about it that way, but I do.

    Yes, on the dropped work too. That does not surprise me.

    Thanks for stopping by.

  3. I have recently been referring to this presentation by Simon Wardley – it is an OSCON presentation that discusses the economics of cloud and its impact upon organizations. In the presentation, Wardley references Jevon’s paradox in the context that Cloud (overall) will not save organizations money. It will provide per-unit cost efficiencies/reductions; but ultimately as a result of this, IT will simply end up “doing more stuff”.

    Towards the end of the presentation, Wardley explains common scenarios that lead to poor strategic investments due to the misalignment of Business and IT. Specifically, the consequence of treating activities as innovation when in fact they are commodity. This is a point raised in a reference in your previous blog post, specifically Mark McDonald’s blog post – “12 Things Every Business Needs To Know About IT.”

    I think Cloud will significantly help IT to serve a larger proportion of unmet business demand for IT through automation and self service. Additionally it will help support APM and sourcing decisions through cost transparency.

    It will be critical that IT organizations adhere to the principles of standardization and automation in this space to ensure operational manageability for deployed services.

  4. Thanks for stopping by Nigel and sharing the link to the youtube video. I saw that a while back from another source and liked it too. I agree with your comments.

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