Anti-Economies of Scale

You must have noticed that IT is full of situations where the economy of scale is actually negative. Unlike retail, the bigger you get the more per unit everything costs. For example: An off-site backup costs nothing when a trusted employee can just take a tape (or jump drive) home. No need for special backup networks or LTO-3 tape drives either. You store your data on the cheap hard drive in your PC, and disaster planning consists of having another commodity PC available to which to restore your backup. This can all pretty much be done by any MCSE-type person that you can hire on a per-job basis.

Contrast the preceding with a larger enterprise: You have to pay Iron Mountain to pick up and store your tapes, tapes that you create from some complicated backup implementation. You need experts for the network, experts for Exchange (you need your own e-mail server, don't you), experts to run the SAN. You need to put this all in a special room, something that has its own design challenges. You may believe you need experts on staff who know your environment to handle all this. You can't just hire commodity skills on an as-needed basis.

The advantage goes to the manager who identifies what can be handled as a commodity, and either purchases the service outright, or at least organizes the internal staff so that the "commodity" tasks and responsibilities are done by "commodity-skilled" people. This has some interesting ramifications that I'd like to address in another post.