Tuesday, July 19, 2011

Dumb IT: We've already got some licenses for this

There are certain phrases that fill me with dread. 'We are using Agile so we don't need to have a vision, we'll just iterate', 'there are no data quality issues', 'We're the first people to use this' and 'The vendors roadmap says they'll do X in 2 years so it will be fine by the time we need that'. One however is completely variable in the fear it introduces because it comes in three clear flavours, one good and two bad.

'We've already got some licenses for this'

What this means is one of three things

  1. We need to do something and a technology we know well is ideally suited where we fortunately don't have to buy anymore licenses
  2. We bought an enterprise agreement when we bought product X and the vendor allows us to have a few licenses for Y and Z as well
  3. I've spent a load of money on licenses for this and we are damned well going to use them
Now clear the first one is fine, this is for example where new functionality is being delivered for a website and the number of CPUs has to be increased.  The later is of course clearly dumb and often is the driver behind IT centric projects that burn money.

The middle-one though however is the most dangerous.  I've seen this over, and over and over again.  A company buys the flagship product from a market leader in a specific segment.  That market leader also has some other products which are either early to market, non-strategic or just plain a bit rubbish and to 'sweeten' the deal they include a bunch of licenses for them and offer this up as value.

A few weeks, months or even years later a project comes along which needs to do a specific thing.  Suddenly someone remembers, or most often pushes, that there are some licenses on the shelf that do that sort of thing so brilliantly money can be saved.

Let me recount a story of just such a decision....

In 2001 I was working with a company who had bought a enterprise package solution from one of the market leaders in the CRM space.  As part of this 'deal' the company was allowed to use up to 4 CPUs of any other product from that vendor.  We had to produce a website to enable consumer to interact directly with the package and this was well before .com front-ends were normal practice.

'Fortunately' the vendor had a new product to do just this, it was new, it was shiny and it was covered by the 4 CPUs.  The alternative was to spend about 6 months developing something custom with about 5 people and despite some heavy cautioning from me on adopting a brand new, unproven technology that looked rather rubbish when I investigated it the company decided that it would be cheaper because of those 4 CPU licenses....

18 months later and with an average team of around 15 people and much hacking, cursing and challenge the site went live with a fraction of the envisioned functionality.

So that 4 CPU 'saving' had in fact delivered a 20 man year cost increase and less functionality.

Want another?  How about the company who used some old EAI licenses and found out half-way through the project that the vendor was discontinuing the product?  How about the company who used the limited number of Web content management licenses and found that 10 years later it was a drain down which millions had been poured... seriously I could go on and on.

The point here is that lots of IT seem to account for license costs in a completely different way to people costs.  Something that saves [£€$]10 of license cost is good even if it delivers 10x that in additional people costs.

The solution is simple, when you look at a programme evaluate the total cost of ownership of the solution not just the immediate cost of buying licenses.  Cheap today is liable to be expensive tomorrow and potentially extortionate the week after that.  TCO is all that should count in these decisions but normally the lure of 'free licenses' outweighs the rationale of 'that isn't the right tool for the job'.

Now that really is Dumb IT

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Mahesh said...

Hi Steve,
Indeed a wonderful post substantiated with your real time experiences. This is basically what Dr Eliyahu Goldratt described as TOC-Theory of Constraints in IT industry.
"Technology is a necessary condition, but it's not sufficient. To get the benefits at the time that we install the new technology, we must also change the rules that recognize the existence of the limitation."

Mahesh Das
SAP Professional

Moshe said...