Building a cost model
To build a cost model, we have to follow three basic steps.
- Identify cost drivers: this is something that we discussed in the first two chapters of the book. Cost drivers are closely related with the business processes. Think of the number or orders that customers of a company place in a defined time. Identifying the cost drivers will help in setting up the environment. In this particular case we must think about scaling capacity when order intake spikes. But we can also think of event-driven architecture, where the placement of an order triggers a number of events, including invoicing and payment, fetching the order in a warehouse and distributing the product for delivery. This will likely involve various systems and applications that must communicate with each other. An important question would be what could be automated and creating the optimal solution, since this will have impact on the costs.
One thing that we haven’t touched yet is the fact that costs...
