Make the Hairs on the Back of Your Neck Stand Up
Cote sent me the recent CIO Magazine article entitled ERP’s Paralysis Problem and the Repercussions for Business Everywhere. The article discusses the findings from a December 2009 study conducted by IDC and sponsored by ERP vendor Agresso, as follows:
A couple of verbatim responses from respondents should make the hairs on the back of your neck stand up: “Capital expenditure priorities are shifted into IT from other high-payback projects” just to perform necessary ERP changes, noted one respondent. Said another: “Change to ERP paralyzes the entire organization in moving forward in other areas that can bring more value.”
To make doubly certain the message gets across, the article finishes with the following “nocturnal” paragraph:
As the sun finally sets on the first decade in the new millennium, it’s high time we say good night to ERP. A new day will be starting soon, and the blemished legacy and failings of ERP’s nearly four-decade-long reign will be a distant memory.
Maybe. While ERP systems no doubt have their own particular twists, the sorry state of affairs described above is true of various industries that have developed complex software systems over prolonged periods of time. Just in the past few months I have witnessed such situations in banking and health care. In previous life I had been exposed to more of the same in other industries. The software decayed and decayed but technical debt had never been reduced. Consequently, the cost of change, any change, today is horrendous. As Jim Highsmith‘s chart below indicates, “once on the right of the curve, all choices are hard.”
In Estimating Software Costs, author Capers Jones quantifies five-year cost of software application ownership (for the vendor). He examines three similar applications, each of nominal size of 1000 function points, as a function of the sophistication of the corresponding projects. The respective life cycle costs are as follows:
- Lagging projects: $2,316,000
- Average projects: $1,860,000
- Leading projects: $1,312,000
Jones goes on to issue the following stern warning:
All known compound objects decay and become more complex with the passage of time unless effort is exerted to keep them repaired and updated. Software is no exception… Indeed, the economic value of lagging applications is questionable after about three to five years. The degradation of initial structure and the increasing difficulty of making updates without “bad fixes” tends towards negative returns on investment (ROI) within a few years.
Enough, indeed, to make the hairs on the back of your neck stand up…
The Agile Executive 
Hi Isreal,
Interesting article, and thanks for the interesting references [to CIO.com]. One particular quote from the Wallgum article that I found quite to the point was:
“… is that this survey actually quantifies ERP system-related failings directly to business disruption—expensive, unpleasant and career-killing business disruption.”
The survey is itself very interesting reading, and can be found here: http://www.agressona.com/Art?AID=3038
Finally, I often do a case study of America LaFrance when I’m talking about software agility in business. You may also find it interesting: http://blogs.zdnet.com/projectfailures/?p=583
Best regards,
Kane Mar
http://Scrumology.com
Kane Mar
December 28, 2009 at 7:34 pm
Thanks for the kind words and the references, Kane!
The business disruption aspect you highlight is indeed of great importance. Having said that, I believe we might have a metrics problem on our hand. Continuous deployment is quite effective as a software quality improvement strategy. What often happens is that it flies at the teeth of the ‘Man in the Dock’ theory. When a major disruption happens, we look for a single point of accountability instead of deciphering the complex pathway to the disruption. Such a theory in use, of course, leads to less frequent deployments which in the long run adversely affect software quality.
Eric Ries has just published a post entitled Continuous deployment for mission-critical applications. I believe he is absolutely on the right path. IMHO we fail to make progress along the lines he advocates because we are stuck on the metrics problem.
Israel
israelgat
December 30, 2009 at 8:51 am
It’s interesting that you mention Eric’s article … I read that article shortly after commenting here! I’m a big fan of his, and especially the concept of Continuous Deployment which I also wrote about a while ago here:
http://kanemar.com/2009/02/11/beyond-continuous-integration-continuous-deployment-at-imvu-and-a-tale-from-pirum/
As far as metrics go, I’d absolutely agree that they should be used with caution and a certain amount of skepticism. The survey in question (from Agressona) appears to be very subjective. Although very interesting, I would not put any more value on it than anecdotal evidence.
Best regards,
Kane Mar
http://Scrumology.com
Kane Mar
December 31, 2009 at 12:24 am
Indeed, the blog by Eric Ries is first class. I would think his contributions will help move us toward a more unified theory of Agile.
Israel
israelgat
December 31, 2009 at 7:37 am
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