Software Wasteland: How the Application-Centric Mindset is Hobbling our Enterprises by Dave McComb

Author:Dave McComb [Dave McComb]
Language: eng
Format: epub
Publisher: Technics Publications
Published: 2018-02-14T16:00:00+00:00

Fallacy # 2 “It will cost more to reinvent the wheel”

There is a great deal of truth to this cliché, which again is what makes it so persistent. As we will see, though, this has led many companies astray.

Who wants to reinvent the wheel? Why invent something that has already been invented?

But that isn’t what this cliché is about in the business world. It is not about invention. It is really: “Why build what you could buy?” Here at the first level of approximation the answer should be “yeah, why would you build what you can buy?”

At the layman’s level, you wouldn’t build your own word processor or spreadsheet when they are readily available at modest prices. At the enterprise level, the decision gets murkier, and relying on metaphors from our personal buying habits may not serve us well.

Enterprise applications are expensive. Even the internal cost to procure them is expensive. We have had front row seats and watched several organizations spend years and at one organization spend over a decade trying to buy an ERP system. (Imagine what they could have accomplished in a decade if they hadn’t been pursuing this goal.) As the price and the long-term commitment to a packaged application increases, so does the proportional internal cost of making the right choice.

However, it’s not just the expense. As expensive as they are, few companies would believe they could recreate the functionality for less by building it or reusing existing well-tested components. Few companies would believe it, but this is what we are already seeing and will soon see more. The cost of creating and maintaining application functionality, if unmoored from proprietary legacy application packages, can be considerably more economical.

Before we elaborate on that claim, let’s spend a bit more time on the hidden costs of application software acquisition.

The first hidden cost of application software is the annual license or maintenance fee. Recently this has been ratcheting up to where it is often 20% of the purchase price. Over a twenty year life, the annual maintenance will be four times the original price, making the cost five times the sticker price. Note that while a product you build yourself will have ongoing maintenance, it will mostly be features you actually want and/or adaptations to your changing application landscape.

The second hidden cost to packaged applications is the implementation cost. You might think that the cost to implement a packaged solution and a custom solution might be comparable, but they are not. I have had the privilege of working on a custom system being implemented in one division of a client while another division was implemented a packaged solution. While the packaged solution saved some money on development, they more than made up for it in implementation. Let’s examine why this is so.

The cost of implementing a packaged application in an enterprise is mostly driven by these activities:

Configuration. As packages have become more and more complex, the act of turning on and off various features has become a dark art.

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