Friday, January 29, 2010

Applying the Pareto Principle to IT Economics

I almost didn’t write my blog today. I’ve been working on the book since I got up this morning and just put it to bed a few minutes ago. I broke from the writing just to eat my meals and unpack a rolling carrying case that arrived for my laptop. The DV8T is heavy and I’ve been having recurring problems with my shoulders. Actually, I think something is off in my neck and the shoulder pain is a side effect. Carrying a beefy laptop over my shoulder is the last thing I need to do. Hence, the rolling bag. I suppose it’s a privilege of age to pull things around on wheels rather than lugging them.

I’m still working on Chapter 1 – Introduction. I’ve written 17 pages and it’s probably one of the hardest things I’ve ever written. When people browse in a book store, they usually read through the introduction. If it doesn’t grab their attention, the book goes back on the shelf.

I’ve completed the Basic Introduction and the section on Organizational Change Management and the SDLC. All afternoon, I’ve been tackling IT Governance and the SDLC. I’ll finish that section tomorrow and work on Project Management and the SDLC and the About This Book sections.

I heard from the editor earlier this week. She’s struggling with bandwidth—one of her editors is on maternity leave and her entire program is blowing up. She’s trying to manage a very busy department while trying to publish books too. It is not an ordinary time to be sure.

She said my original proposal needs some refinement. I offered to take care of it this weekend because she’s so busy. I’m doing my best to make the amendments to the proposal and finish chapter 1 so I can send them to her on Monday.

Today’s topic on IT Governance and the SDLC really made me think hard about a few things. I opined on how to apply the Pareto principle to an early iteration of requirements elicitation and analysis, before a project is approved. Let me share a little of what I wrote:

Vilfredo Federico Damaso Pareto[1] was an Italian industrialist, sociologist, economist, and philosopher who was born in Italy in July 1848. He made a number of important contributions to economics, particularly in the study of income distribution and the analysis of individuals' choices. He introduced the concept of Pareto efficiency and helped develop the field of microeconomics. He also was the first to discover that income follows a Pareto distribution, which is a power law probability distribution. The Pareto Principle was named after him and built on his observations such as that 80% of the land in Italy was owned by 20% of the population. The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes.

What has the Pareto principle got to do with IT economics? If we apply the Pareto principle to investment value and business requirements, the resulting axiom reads, “80% of the business value of an investment comes from 20% of the requirements.”

I’m not sharing any more than those two paragraphs above as this point. If you want to know how I conclude the argument, you’ll have to buy the book when it comes out.


[1] Source: http://www.wikipedia.com

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