[scop]

That was where my mind went to when I saw the headline. Granted that while I’m not on the Finance side of things and am in fact a developer, “six million” didn’t seem like much at all considering engineer salaries. It’s certainly an achievement, but at what short and long term salaried cost?

[rapht]

A primer on valuation: in many financial contexts, $1 of operating savings may be worth much more than $1 of investment.

That is because an investment is a one-off, so it's actually worth $1, but the savings are recurring, so they are worth the same number of years that a company's profits are valued. Depending on sector and investors' beliefs in the future of companies, this factor is typically in the 5-20x range. That means that $1 of savings is well worth at least $5 of investments.

Factor in anything you want!

[shermantanktop]

In an ideal org, perhaps. In many places, forming that team starts a process where it continually finds reasons to still exist, so your $1m is yearly until a reorg.

Sigh.

[admax88qqq]

If that $1 of investment doesn't yield any returns that's not an investment it's just an expense.

So yes $1 of savings is worth more than $1 of spending.

[TheNewsIsHere]

You could potentially take it as an investment loss for tax purposes. Whether that’s proper depends greatly on the circumstances surrounding how the money was accounted for and spent.

[admax88qqq]

That's not how taxes work. Investing $1 doesn't count as a loss for tax purposes.

[TheNewsIsHere]

I did not claim that investing $1 is a tax loss.

[Rastonbury]

$6m across 2.5 years is like $15.5m, how many engineers man-months to breakeven, I'm pretty sure it was worth the work.

[mbesto]

$6m in perpetuity is like infinite and engineers can be fired.

[robocat]

It really isn't. The first years dominate the value and later years are worth nothing due to inflation. Google a calculator and use a reasonable discount rate and I suspect you will find that todays value for an infinite perpetuity is a lot less than your intuition might guess. It always surprises me.

[minkzilla]

But they will save more than $6M the second year because AWS will up their prices.

[mbesto]

What?

It costs me $10M to run something every year, it now costs me $4M to run something every year. I have $6M in my pocket every year now in perpetuity. Compound that annually with the assumption that I maintain or increase top line revenues and thats pure extra profit.

Note - I admit, all of this ignores two key things (a) we dont know the engineers salaries who built this and (b) we dont know the ongoing maintenance costs.