“He who controls vocabulary controls thought.” Ludwig Wittgenstein
As a CIO, often times a final decision for a product or service gets framed in these terms: “What value are we getting?”; or “Is it worth the value?”. Vendors will often flip this around and base their sell on their “value” , as in “we give you more value”.
At various times that meant, literally, their offering was less expensive than the competitor’s, or that their premium was justifiable for the extra functionality (perceived or real) that they brought to the table.
Now, I oftentimes hear a discussion about Cloud Computing and the “value” word gets bandied about – as in “cloud provides value pricing”, or “cloud brings more value to the IT purchaser”. Features like the “pay as you go” model, and cloud elasticity, is often perceive as value add.
Value add. The word “value” has become that ingrained in our IT lexicon that we call some vendors “value added resellers”, or endless debates about “the value of IT”.
What is value, anyways?
By Encarta’s definition, value is “an amount expressed in money or another medium of exchange that is thought to be a fair exchange for something the worth, importance, or usefulness of something to somebody”. It has taken on similar meanings in other genres:
mathematics: a numerical quantity assigned to a mathematical symbol
music: the length of time that a note or pause is held
art: in painting and drawing, the lightness or darkness of a color
phonetics: the quality or tone of a speech sound that a letter or written character represents
“Value” has also been the retail code for low prices, and that oft-repeated word is taking on a broader definition that includes quality and selection.
This was manifest in Wal-Mart’s old tag line as a leading value merchandiser: “Always low prices”. (It’ s now “Save money. Live better”).
Value investing raises the bar. Value, for investing, is not just price.
The OECD has a definition, too: “Value at the level of a single, homogeneous good or service is equal to the price per unit of quantity multiplied by the number of quantity units of that good or service; in contrast to price, value is independent of the choice of quantity unit.” Huh?
and from Etymology online: c.1300, from O.Fr. value “worth, value” (13c.), noun use of fem. pp. of valoir “be worth,” from L. valere “be strong, be well, be of value” (see valiant).
Wow – that’s a twist, Value is related to be valiant. Now we’re getting somewhere.
Curmudgeon that I am, here’s my take on what value really means:
“Value” at its most basic usage is just another word for the worth of something – captured numerically, euphemistically, or anecdotally. That’s how we tend to use it across the board.
As a purchaser, it often times translates to the best (less) price (read: expense) for the most features, regardless of cost to develop/deliver those features or functions.
As a vendor, it too translates as the best (most) price (read: profit), without regard to feature/function, and with particularly no relation to cost of goods. If its worth more to you, you’ll pay me more, even if it cost me nothing. This can get precariously close to extortion – which I sometimes feel is a vendor strategy.
I wonder that if in a perfect world, every thing would be priced at cost plus – and the plus would be negotiable based on the needs of the vendor, and the wants of the buyer. But if the markup far exceeds the norm – that would be value for the seller. Likewise if it was far less than the norm – or even less than the cost of goods, that could be construed as value for the buyer. That is assuming the product/service is something the buyer needs/wants (Let’s not go into the generation (marketing) of needs/wants…).
So in some sense, cloud as value priced just means a vendor will be able to charge you much more that you would normally pay for the same service if it weren’t “cloud”. Or that you could get it at a price that is not sustainable for the vendor. Neither is where you want to be in a long-term relationship with your supplier.
But then again, I guess it depends on its value …