Cloud Matters Canadian Cloud Council…. Costs & Benefits of Cloud
I had the privilege of presenting at the Canadian Cloud Council conference in Banff Canada. It was exciting to see and hear all the wonderful things people are doing or planning to do with cloud computing.
My talk touched on the analysis of the business case for cloud computing and pointed out that sometimes cost savings are attributed to the cloud when they are really do to factors such as development environment. The point was that each cloud development needs to estimate costs and business value and make the right decision for the business.
I have several more comprehensive briefings on cloud costing available if requested. And have included the summary of Cloud costs, benefits and ROI.
My key points were:
- Use an estimation process to identify costs, schedule, risk and benefits
- Make decisions based on value to business
- Attribute costs and cost savings to their root causes rather than just lumping them all to “cloud”
It is exciting to see the evolution of cloud computing.. And sometimes disturbing when organizations cast their distributed applications as cloud applications just to get on the cloud bandwagon.
Banff…. Doesn’t get much more beautiful than this..
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
The Risks of Risk Management
Computer Aid featured a thought provoking article on the risks of risk management. The article noted, for example, that people that are wearing seat belts take more risks (drive more risky) because they feel safer in their seat belt. And while they are actually safer the pedestrian, cyclist, and other drivers may be in more danger.  And
The article referred to the work of Sam . Pelzman sowed that showed:
” What Peltzman identified is that behavior can change substantially in response to risk management policies. For example in the case of seat belts, people tend to drive faster and have more collisions when they use seat belts because of the sense of security it gives them. This is not to say that seat belts are ineffective, it seems that traffic safety overall (especially in terms of road deaths) has improved as a result of them, but not as much as you would have expected, because of this behavioral offset.”
Now how can this impact IT projects you might ask…. Well, if we have risk management policies in place organizations might
Then once people have identified risks and have put a risk management plan in place they may be more inclined to take more risk. Yikes.
“So the question for the project manager is are your risk management policies changing behavior?… Are people less cautious knowing there is a more robust monitoring process in place for their projects? Are team members less focused on escalating problems knowing that someone else is watching out for them?”
Risk of Unknown Unknowns
Even more important is that risk management doesn’t usually capture unknown unknowns.. That is risks we haven’t thought of. I have heard many people identify those risks that wernt thought of as being the things that caused project failures more than those that were thought of.
10 Step Process and Risk
The 10 step process in my book includes step 6Â quantify risks and risk-analysis on dealing with risks and is worth reviewing.
Risk Process Failure
And as Douglas Hubbard points out: “The ultimate common mode failure would be a failure of risk management itself. A weak risk management approach is effectively the biggest risk in the organization” Â Hubbard, Douglas W. (2009-04-06). The Failure of Risk Management: Why It’s Broken and How to Fix It (Kindle Locations 236-237). John Wiley and Sons.
The point is if the initial risk analysis is not meaningful then the risk management methods are likely wrong and addressing the wrong problems.
“If risk assessment is a failure, then the best case is that the risk management effort is simply a waste of time and money because decisions are ultimately unimproved. In the worst case, the erroneous conclusions lead the organization down a more dangerous path that it would probably not have otherwise taken.”
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Using Trends In Variance To Understand Trends in Risk
I always prefer leading indicators to lagging ones. When our CFO comes in at the end of April, for instance, and tells me how we performed through March I am always interested to know but…
I often say, “What do I do with this information–it is now ancient history.”
The paper “The Canary in the Mineshaft: Key Indicators for success in aerospace and defense programs” discusses trending based on leading indicators:
- Trend in estimated schedule to complete (ETC)… ranges in estimates of time to complete, then Monte Carlo analysis based on the uncertainty
- Trend in net present value (NPV)… Value provided by this program, again based on a range… This factors in the cost to complete, maintenance and ownership costs as well as revenues derived
Their point is if the trend in variance of range estimates of the above items is getting smaller, risk is being reduced and if the trend is getting larger risk is increasing.
They wisely use a definition of risk that equates it to uncertainty rather than discrete risks in this context.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
IT Risk Management Through Process, Estimation and Measurement
I had the privilege of presenting “IT Risk Management Through Process, Estimation and Measurement” at the Manila ITMPI conference on the topic of IT risk management. There was a large, savvy audience, eager to further explore this topic. As we have seen in other countries, many don’t look at estimation, planning, measurement, and control as critical processes. Those organizations often have less than successful projects, late, over cost, and with missing functionality. Conversely, those organizations that do spent mind-share on these critical planning and management functions perform much better. Of course not all their projects are successful, but many more are, and they know when things are turning for the worse and can fix them sooner. The three key points of the presentation were.
- Critical IT Systems present significant risks to organizations
- IT estimating processes are core to reducing risk
- IT estimation & metrics can help mitigate risk & empower program managers to be successful
PS: I also got a little R&R in, scuba diving about 100 kilometers outside Manila. Beautiful diving and very unusual dive boats… This is the exact style, but not the actual boat we dove from.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Galorath / DCG IT Estimation For Business Value and Project Success Clinic
Here are the slides from the Galorath / David Consulting Group estimating clinic  held in New York City. There were interesting discussions encompassing dealing with impossible demands, understanding risk and risk management, sizing, and a number of other topics. Note: The Galorath slides and the DCG slides are combined in the one PDF file.
Concepts of IT providing business value to the organization were also discussed in detail.
Thanks to all who attended and especially to Mike Harris and David Herren for their insights.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Computing the Value of Incomplete Software
IBM’s Murray Canter published an interesting article in the communications of the ACM covering calculating and improving the ROI in software systems.  Murray shows how to compute the “investment value” of incomplete software and illustrates why it does have value showing how to compute the net present value and the return on investment of this in process work, using Monte Carlo simulation. Murray states two axioms:
- Costs and benefits occur over time, so their present values are found through NPV equations
- The future values of costs and benefits are random variables, described as a statistical distribution
I should note this requires a subscription to ACM digital content.
Its abstract states:
“Constrained by limited budgets, most enterprises find it essential to apply unprecedented business discipline to the business function of software and system delivery (SSD) across entire software and system life cycles. For this reason, the CIO, CTO, or VP of software or systems development may be under increased scrutiny from the corporate chief finance office (CFO). When conversing with the CFO, money talks, so only one of two sorts of conversations can take place: software and systems as cost center or software and systems as value-creation center.”
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Measurement and Providing Value to the Business ISMA Keynote 2011
Here is a copy of my keynote talk at the 2011 ISMA measurement conference, Measurement and Management and Business Value. The real point is the IT and measurement personnel have the information, knowledge and skill set to provide value to the business, far beyond the costs generate. But the information needs to be communicated in terms leaders can understand rather than the techie language we all think and speak in… AND if IT starts showing how it contributes to the business and becomes a profit center instead of a cost center IT will get more money to apply to more valuable things.
UPDATE: Someone also asked for a reference communicating the language of management. I believe this publication on business case analysis to be helpful in that regard.
PS In my talk I referred to software and measurement people as geeks. To many the term geek is a source of pride. One person in the talk was offended by being called a geek. My sincere apologies. However modern vernacular often defines a geek as a lover of technology, a software developer or someone with an intense love of mathematics. I consider myself a geek. And my friend Paul Glen makes his living by “leading geeks.”
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Galorath Keynote ISPA March 2011
Today my conference presentation involved understanding and estimating value in software and IT systems as well as total ownership costs. It still amazes me how so many software and IT leaders do not want to think in terms of Return on Investment but just want to build things that seem to be good ideas. If we would build what has the most value IT could become a profit center. Key points were:
- Estimation is a key portion of business decision making
- Value must be considered in addition to cost
- Data doesn’t have to be perfect to be useful
- Estimators taking some responsibility for business value analysis can make a major improvement in business
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I have included entire PowerPoint presentation here.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Estimating Best Practices
The following are the bullet points from Dan’s paper on estimating best practices. Â Using these best practices can increase project success dramatically.
- Decide Why You Want An Estimate
- Map Estimation Goals To Estimate Process Maturity & Develop Plan To Achieve The Maturity
- Have A Documented, Repeatable Estimation Process
- Evaluate Total Ownership Cost; Not Just Development
- Estimate A Range And Pick A Point For The Plan
- Re-estimate The Program When It Changes
- Avoid Death Marches: Programs With Unachievable Schedules Are Likely To Fail And Drain Morale
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Possibilistic Versus Probabilistic Estimates
I was in a cost task force meeting this morning, looking for ways to improve cost analysis in outsource environments, both from the customer and the offerer sides. These have been interesting meetings in many regards. Today the discussion focused on outsourcers who provide a low estimate, looking for the best case to win the business rather than the most probable cost.
One of the panel members pointed out that some outsources bid “possiblistic” prices rather than probabilistic prices. Possibilistic estimates are possible, if everything goes right, but everything going right is not probable.
That is one of the reasons SEER provides a range in addition to likely costs & schedule.
We recommend planning for the probable, not just the possible.
Thank you for reading “Dan on Estimating”, if you would like more information about Galorath’s estimation models, please visit our contact page, call us at +1 310 414-3222 or click a button below to ask sales questions, sign up for our free library or schedule a demo.
Project Prediction Infographic
