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.
Evidence of Cloud Development Saving Development Time
An Evans Data Cloud Development Survey found that developers believe they are getting an 11.6% reduction in development time by using public and private cloud development platforms such as Amazon WebServices, Windows Azure, HP Cloud Services, VMWare, Salesforce force.com, and Netsuite’s cloud services.
“While about 10 percent of developers cited no time savings in using cloud environments, an almost equal amount said they had experienced more than 30 percent time savings. About 38 percent cited savings in the 11 to 20 percent range.”
Obviously if we just take the same tools, practices and environment and put it in the cloud nothing magic happens… Perhaps response time is a bit slower. Looking at the impact of response time we see a potential 6% increase in schedule due to immediate response to a developer and an 18% increase in effort if every action has a terrible (3+ second) response:
So why should the cloud reduce development time?
- Better environment (e.g. force.com)
- Better development Tools (e.g force.com)
- Mobile making more work hours in a day (development during off-hours)
- Hawthorne Effect (People respond to being measured…or in this case estimate reductions because they hope there are some)
A Galorath study of salesforce.com’s force.com showed an over 40% decrease in development time. But this was attributed to the availability of reusable components and the powerful development language, not the fact that it was cloud based.
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.
Typical Agile Development Lifecycle
I ran across this nice graphic of an agile lifecycle produced by Galorath’s David Dewitt. I thought it was clear in its presentation of the lifecycle and how estimation and planning fit in.
I am often surprised when speaking to people who say, “We don’t need estimation or planning any longer because we are agile.” I suppose that may be true for very small projects. But for projects of any significance, it is not enough to tell stakeholders who need to budget and plan for delivered software that we will tell you we are done when we get there. Estimation at the macro level is required so the overall project scope is understood as well as at the lowest levels for developers to commit to their work in a sprint.
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.
New SEER Labor Rate Calculator: A Leap Forward in “Should Cost” & “Will Cost”
I saw a demo today of our new labor rate calculator. It takes in various labor rate drivers and computes a viable labor rate. It even evaluates the cost of equipment, electricity, floor space, insurance, etc.
This is a great step forward in the “should cost” and will cost for product manufacturing. Buying organizations can describe the problem and see what a fair labor rate for the region, country, machine, etc. Mixed currencies are supported as well.
The following is a small example of the kinds of information that can be specified In this case it is configured for manufacturing.
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.
Frank Vogelezang Pricing Vs Costing & Proof That IT Systems Can Be Estimated
Frank Vogelezang of Ordina‘s presentation at the Galorath conference in the Netherlands yielded numerous interesting and well prepared presentations by customers and partners. The presentation included here: Estimating & Pricing of Application Management covered the processes for estimating what the problem will cost and the separate processes for pricing what will be charged to the customer.
Estimation Vs Pricing
Estimation was described as an engineering discipline while pricing was described as a commercial discipline that leads to a structure optimized to win the deal with an offering that meets customer acceptance criteria.
SEER Validation of the COMPLETE SYSTEM
The part I found even more interesting was the SEER validation included within the paper. This validation compared the IT total system cost, including software development estimated by SEER-SEM, IT infrastructure (hardware, bandwidth, etc.) and IT services estimated by SEER-IT, and other (pass through) items estimated via manual processes. The results were good even before any calibration, and even better after they calibrated with some of their history.
One Size Fits All Models Versus SEER
Frank pointed out the risks of using simple cost estimating relationships for estimating and defined the reasons why they choose SEER including:
- The estimating model needs to have a breakdown structure that can accommodate different cost-drivers
- Requirements for a supporting tool: Ability to facilitate a breakdown with different cost-drivers Based on experience data
- Possibility of calibrating the data with own experience
- SEER for IT as the basis for the model Six types of knowledge bases (out of 12)
- SEER for Software for Application Development calculations
WBS In SEER IT Infrastructure, IT Services, Software Development
Results before calibration (at a 50%) probability were slightly higher than actuals. With calibration they were within a few percent. And again, this was the entire system estimate including software, hardware, services, and other costs.Be sure to check out Frank’s blog http://www.ThePriceofIT.blogspot.com for more insights from him on a variety of relevant topics.
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.
The Future of Software Analysis Measurement Webinar Featuring Bill Curtis, David Herron and Dan Galorath
We have some exciting events coming up this month with the first: The Future of Software Analysis and Measurement on October 12, 2011. I am really excited to share the virtual podium with Bill Curtis, Senior VP and Chief Scientist of CAST Corporation and with David Herron, David Consulting Groups VP of Knowledge Solution Services as moderator.
Bill and I both spoke at a software engineering conference last year and I got very excited about his work in software analysis with CAST. Besides Bill being an engaging speaker his content was very illuminating, covering issues of existing software, its complexity and reliability. He ev!–more–
en showed the number of latent defects in software of various languages. I have greatly summarized some of the a href=http://www.galorath.com/wp/software-defects-in-fielded-software-cast-analysis.phpsoftware defect conclusions /aelsewhere on this BLOG and CAST has been instrumental in recognizing and quantifying the a href=http://www.galorath.com/wp/500-billion-it-debt-for-deferred-maintenance.phptechnical debt/a
And with David Herron, one of the most knowledgeable people in the measurement community, this should be a do not miss event.
Details of the event follow as does a link to signup. Hope you can make it.
blockquotestrongThe Future of Software Analysis and Measurement/strong
October 12, 2011 8:00am Pacific, 11:00am Eastern, 4:00pm London
a href=http://www.castsoftware.com/news-events/event/future-of-sam?gad=glrClick this Webinar Link to sign up/a
Join us on October 12th to hear from an exciting lineup of experts on the Future of Software Analysis and Measurement: Dan Galorath, President CEO of Galorath Inc and Bill Curtis, SVP Chief Scientist, CAST will have an engaging discussion moderated by David Herron, VP, Knowledge Solution Services, David Consulting Group.
These industry veterans will share experiences with their client’s software development processes and discuss how Software Analysis and Measurement tools coupled with Parametric Estimation models can impact organizational performance through increased ROI, customer satisfaction and business value.
The panel will provide insightful and actionable steps that will make an immediate impact on your strategy including how to:
• Drive organization value by fueling Estimate and Measurement practices within an enterprise
• Build the funding rationale through proven economic impact models
• Establish the ROI from Estimate and Measurement practices and process/blockquote
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.
Why We Estimate Schedule & Cost
I stumbled across a working draft of an excellent document on my hard drive, produced, I believe, by a gentleman from Texas Instruments some years ago. I thought this list of why we estimate cost and schedule was excellent and still relevant.
Why We Estimate Schedule & Cost
- To scope proposed tasks
- To explore alternative system concepts
design to cost/budget
- To explore alternative design concepts
- To explore alternative proposals for enhancements and upgrades
- To identify key design elements
- To identify key process parameters
prioritize needs vs wants
- To identify key assumptions
- To identify and quantify uncertainties
- To identify tasks and their relationships
- To assess schedule feasibility
- To identify, allocate and schedule resources
- To assess an organization’s ability to perform within targeted costs
- To evaluate the consequences of internal and external constraints
- To establish achievable objectives
- To establish a basis for quality service
- To establish commitments
- To bound the risk against customer needs
- To balance levels of risk against customer needs
- To provide a basis of successful risk management
build vs buy analysis
- To prepare successful proposals
- To evaluate proposals from competing bidders
- To establish baselines for project tracking
enhance/reuse vs redesign analysis
- To predict life-cycle costs
- To predict returns on investments
- To provide information for establishing business and investment strategies
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
