In 2023, our engineering/IT department needed to drive vendor costs down 20%. How do you pick the right cost cutting initiatives? If we focused exclusively on cost reduction, we could leave the company in a crippled state. We needed a way to consider what price we would pay to get the benefit we were after. Enter the TRM analysis.
Poor choice (-45%)
Before leveraging the triangle for thinking through where to make cuts, we eliminated two vendors, which moved the cost in the right direction but came with bigger costs than gains. Notice how much bigger the price triangle is vs value.
Benefit
The goal of lowering vendor costs was achieved.
COST
However, the company was not only exposed to greater risk, but now employees needed to cover gaps previously filled by software (time).
This tradeoff can make sense. However, looking at the triangles for other options showed we didn't need to take these risk/time expenses.
(I can't be specific for obvious, risk reasons)
Good choice (+257%)
In engineering, we leveraged four environments, one of which was called UAT (User Acceptance Testing). This environment was intended to be an identical copy of production, down to the load balancing, scaling policies, etc. We chose to remove it entirely.
Benefit
This cut resulted in one of the biggest cost savings (sorry AWS), but also saved time - developers did not need to deploy code to an environment and test it yet again.
COST
No team was using it for its intended purpose. The environment wasn't catching any problems not found in lower environments and was no longer providing value in terms of reducing the risk of a bad deployment (but may in the future, and this should be reevaluated).
automation (+200%)
Life wasn't always about cost. Sometimes prioritizing things that made massive improvements in other areas made more sense. A process to provision data stores slowed both the product teams and the data team (time). What if we automated it?
Benefit
Capacity on the data team and product teams was dramatically improved. Conveniently, the change also reduced our vendor costs too, by moving to cheaper infrastructure.
COST
If automating were easy, we would have done it sooner. Interestingly, the process existed to mitigate risk, but by reframing the problem in terms of value, this made a clear winner.