Churn Rate For On-Demand (Software as a Service) Solutions
From an email I received from Frontrange Solutions looking at tradeoffs of internal versus SaaS.
“Though many are jumping on the on-demand bandwagon, many are also jumping off. Churn rates for on-demand are as high as 30 percent while renewal rates with on-premise software stand in the 80 percent range. There must be a reason an increasing number of organizations that tried on-demand applications have returned to an on-premise solution. For reasons such as:
- total cost of ownership
- ease of customization
- control of data
- process automation options
- user-interface
- disaster recovery
What this doesn’t seem to show is whether those who drop out of SaaS go to an internal solution or just stop doing that SaaS function. This needs more study.
After the recent disaster where the building where we host our mission critical applications (with its backup generators, etc) was without electricity for two days, we are actually investigating getting our email and other functions out onto a data center ourselves. It is more expensive since we have already invested in infrastructure and IT services. But it may be worthwhile for disaster recovery. Of course the questions of what if the data center has a disaster itself, how do we keep long term backups, etc. are still unanswered.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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Software Product Engineering Benchmark By Aberdeen
According to Aberdeen research study Software Project Engineering Outsourcing.. the value of Agile in outsourcing
- Reduce Development Cost 57%
- Lack of In-House Resources 50%
- Allow internal staff to focus on innovation 30%
- Improve time to market 25%
Benchmarking
| Productivity Scorecard Comparison | |||
| Best (Top 20%) | Average (Middle 50%) | Bottom 30%) | |
| Project cost | -17% | 3% | 22% |
| Time TO Market | -10% | 2% | 28 |
| User Satisfaction | 18% | 4% | -4% |
ITIL Usage
Even best in class organizations onl 22% se ITIL with virtually no adoption by the average or laggards
Agile Development
Agile developers are more likely to use project management tools, code development and testing technologies, real-time progress tracking and other tools.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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Eating the IT Elephant: Moving From Greenfield to Brownfield Development
The book “Eating the IT Elephant“ discusses the issues of moving from developing new systems to continuing evolution of legacy systems and provides practical, step by step methods of getting these under control. It discusses Brooks Law and its fundamental truths and then says “Brooks had it easy.” It points out that Brooks’ original work was developing a new (Greenfield) system with a local team. And that today our teams are global, our systems are scattered and interrelated.
It discusses the demands of global systems, project reporting, change management, induced complexity (the technology itself is rarely the problem but the way the technology is put together becomes the “induced complexity”), requirements definition and, my favorite, ORGANIZATION and PLANNING.
While the book does not reference SEER directly, it discusses the difficulties and probable failure of projects that do not understand the minimum time, the realistic costs and the risks.
This book recommends EVERYONE read Frederick Brooks’ book, “The Mythical Man Month.” I heartily agree. It has been interesting to see others attack Brooks Law , “There is an incremental person when added to a project that makes it take longer, not less time, and adding people to a late project makes it later.” Brooks Law is alive and well today and involved in nearly every Brownfield “legacy innovation system” as well as new system. The key is making sure you are viewing Brooks Law at the correct level.
The book includes a process for “eating the elephant,” improving Brownfield developments. I recommend giving it a read.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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IT Costs Per Transaction Provide Valuable ROI Basis
Here was a recent post on the Harvard Business Blog on understanding the transaction costs of IT. According to the blog:Â
- the IT cost per equity trade is approximately $0.17
- the IT cost per hospital bed is $65 per patient
- the IT cost per trucking mile is $0.18
“…executives usually think about technology in terms of percentage of revenue, or percentage of operating cost — which contains almost no useful operating insight at all”
I thought this was an excellent point and looking at IT costs in this way can add reality to the cost of IT. What we need now is the business value of IT. For example, if having IT for a hospital bed includes automated monitoring and reduces staff or increases correct treatment (hospital error is shown to be the third largest cause of death in hospitals, according to some studies) we can make the most appropriate decisions.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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Estimating the Effort, Cost & Schedule of Net Centric Systems
I just got a peek at a draft briefing for this week’s SEER seminar in El Segundo encompassing using SEER-IT for hardware oriented systems such as Net Centric systems. The bottom line is SEER provides full estimating capabilities for such systems.Â
I recommend users attend this free seminar in El Segundo this Thursday, October 7, 2009 to hear other users success stories and lessons learned as well as tips from the SEER developers.
Also, I reviewed some of the presentations from the Estimating United Conference at Manchester United Stadium today. There is much excellent content in their as well.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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Estimating and ITIL
As we look at ITIL it is somewhat difficult to see the estimation and planning components. Looking on the web I found the ITSKEPTIC  had some strong comments / observations as follow:
When we hear it pronounced that it acceptable for ITIL to be full of holes because one shouldn’t rely on ITIL – one should mix and match from multiple frameworks: ITIL, COBIT, CMMI-SVC, MOF, USMBOK, FITS, Six Sigma, ISO20000, PRINCE2, MoR, ISO9000, ISO27001, ValIT, ASL, BiSL, ISO38500… Personally I think it is the greatest failure of our profession that this is the case, but it is what it is … for now. It is absurd to expect IT operations people to have the knowledge and skills to do that – they must rely on external consulting experts (who are the ones who proclaim the “mix and match” principle most loudly). The number of ITIL Experts who have a strong knowledge across enough of these frameworks in order to make informed best practice decisions on Mix and Match is how many?
Estimating and planning is a best practice whether you are deploying ITIL or any other process framework. Viable estimates yield achievable plans yield successful systems.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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Computing the Business Value of IT
While I am a strong proponent of examining the business value of IT systems in terms of return on investment, net present value, internal rate of return and other quantified measures. Â There are some additional considerations that should be used with prudence:
- Intangible Benefits: For example improved customer satisfaction, better image.
- Additional Future Benefits From Groundwork Laid By This Project:Â Foe example: deploying a new CRM system that lays the groundwork for a human resources system within the same structure.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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CIOs & Infrastructure Technology (IT) decisions
I received this short summary of how organizations have benefited from SEER for IT, written by Galorath’s Dale Martin, and thought it had some interesting points.
Â
How does the Chief Information Officer (CIO) make the right decision regarding IT? Do they simply just keep buying every bell and whistle that comes out of the computer world or do they have a way to make intelligent decisions for their company? Believe it or not, there are rational ways to make solid organizational decisions regarding your IT projects. Let me show you 3 examples of organizations that have maximized IT resources using a parametric model called SEER for IT (Information Technology).
SEER for IT is a new parametric model developed by Galorath Incorporated to capture the Total Cost of Ownership for an IT project. The foundation of this model centers around 12 different types of work breakdown structure (WBS) elements and a group of Knowledge Bases (KB) built on industry standards. Knowledge Bases are a collection of historical data organized into a Windows template for ease of use. The user selects and/or enters data into structure and framework to characterize the environment.  In most cases the user simply selects a WBS type and then selects the knowledge bases. After that, the user has to specify quantities and he gets a Rough Order Magnitude (ROM) estimate of the typical cost, effort, and schedule for this activity based on industry norms. If the user knows more information, then the model allows him to tailor the WBS element in more detail. It is a quick way to come up with cost, effort and schedule on IT projects with very little information up front, with a lot of industry data incorporated via knowledge bases to support the results.
Now let’s talk about how this tool can assist the CIO out in the real world. This model is being used currently by a major automotive manufacturer.  This major company took the right steps to fully utilize this new parametric tool. It completed the initial training by Galorath and has already built and validated the results against internal historical values. It is in the process of piloting a Joint IT Estimation Process in North America for projects proposed to be included in their 2010 business cycle plan.  This will allow them to integrate IT estimates into a unified project cycle plan for the requesting customer. Over time they will be able to look strategically across the enterprise and make decisions on dedicating resources to IT projects from a global view.  Â
A large Federal agency employed SEER for IT across its enterprise. First they received training and built over 70 estimates in the first year. They developed a process where they collected and built catalogs of their major IT activities.  Once all the estimates had been internally reviewed and validated, the estimates were merged into a portfolio. This estimate portfolio was then compared to available budget, resulting in a down select to about 30 projects. A further review identified 15 of those projects as being critical to the organization’s business objectives. This organization had been plagued with massive overruns in the past. They had failed to account for the operation and support of already started projects and the tail of activities and overlapping costs and activities. Using the SEER for IT tool as part of a formal estimating process brought about an organizational discipline that focused on a Total Cost of Ownership perspective.  It was able to maximize economies of scale of purchased hardware and software. Now this organization has the complete picture of its portfolio of projects and also the added benefit of all the collected corporate knowledge regarding ongoing IT activities to make solid decisions for the future.
SEER for IT has been used to assist in making competitive decisions to develop price to win strategies. One major defense contractor employed this model to estimate the industry average for developing a major project. The client then placed the estimated competition’s rates into the model to develop a winning bid strategy. If you have a good idea of what your competition is going to bid, then you can develop strategies to win. Specifically, they decided to utilize cheaper subcontractors in key areas to seize the advantage with just a small impact on their profit margin.Â
In conclusion, the CIO can use SEER for IT to evaluate Total Cost of Ownership cost, schedule and effort of new IT projects in a systematic, logical fashion while capturing the corporate knowledge of its ongoing activities. It can help allocate scarce resources to the most critical requirements. In addition, it can help the organization to develop price to win strategies to seize new opportunities for new business and also realize economies of scale for hardware and software purchases for its own projects.Â
SEER for IT simply “works” when it comes to IT decisions. Take a look at what SEER for IT can do for your company.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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US Government IT Spending Dashboard
The new government CIO has started a site showing the federal budget. If you are interested in IT spending within the US government take a look at this site: “US Government IT Spending Dashboard.”Â
The dashboards include project portfolio management, visualization and includes analysis. Information encompassing many items such as:
- New Versus Upgrade Versus Maintenance
- Specific IT Spending By Category
- Trends in spending by category
From the site’s background:
The IT Dashboard provides the public with an online window into the details of Federal information technology investments and provides users with the ability to track the progress of investments over time. The IT Dashboard displays data received from agency reports to the Office of Management and Budget (OMB), including general information on over 7,000 Federal IT investments and detailed data for nearly 800 of those investments that agencies classify as “major.” The performance data used to track the 800 major IT investments is based on milestone information displayed in agency reports to OMB called “Exhibit 300s.” Agency CIOs are responsible for evaluating and updating select data on a monthly basis, which is accomplished through interfaces provided on the website.
Â
Check out the IT Spending and Trend videos on the FAQ page for examples of how to use this resource.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.
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New Survey Casts Shadow On Cloud Computing Adoption
15% of corporate customers planning to use cloud in the next year.
A network world article shared results of a survey:
About 15% of corporate customers are considering cloud computing over the next year
The survey of 300 corporations worldwide found that 38% are undecided or unsure about whether they will adopt cloud services, and another 47% said they are not considering implementing cloud in the next year. Security is the biggest roadblock.
85% of corporate customers will not implement a private or public cloud in 2009 due to security concerns.
The findings may be surprising given the industry’s current obsession with cloud computing, but the numbers aren’t too far off the findings of other surveys. Forrester recently found that 25% of enterprises with at least 1,000 employees are using or plan to use hosted virtual server offerings such as Amazon EC2, and that fewer than 20% of smaller companies plan to do so.
Earlier this year, Gartner said that cloud application infrastructure technologies are not yet mature and that adoption right now is limited mostly to “pioneers and trailblazers.”
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page or call us at +1 310 414-3222.