Does cost matters?

When making a purchase, does the cost matters?

The question is very relevant when you are making estimates for your new IT-project, but why?

The first question is how relevant factor cost is when making a selection of products. This different between consumers purchases and company purchases. 

For consumers, a large majority, prioritize other factors than cost. A small group don't care at all and this is why we have luxury cars and other status items. 

For companies, the cost of a product or service is much more important, as this is the primary measure in their financial statements every quarter. OPEX and CAPEX are much more relevant figures than a customer satisfaction ratings. Therefore, cost is very important for decision makers when select what to purchase and for which price.

The second question is what to buy when you have limited resources. 

If you as a consumer have a low income, you alternative often is buying something cheap or not buy it at all, thus saving money for something else more important.

Most companies today have a situation comparable to a low income family. Their funds are limited, and they have to prioritize their investments based on cost, even if it's not the best longtime solution. Sometimes they have a good revenue, but they throw away money on things not beneficial in the long run, like a young man partying all times.

This is why cost estimates are more important for companies than most consumers. 

The more unknown factors, the more uncertain will the cost be. "And as Glenn B Allerman said, we work on NO program that is not complex." Complexity adds to both uncertainty and cost and this is why estimates are so hard.

As most manages avoid risks, compared to entrepreneurs, they tend to say no or stall a decision, if the cost is unknown or uncertain. Even if it will make your company disrupted in the long run.

If you are doing work for small firms, start-ups or wealthy consumers, this doesn't apply in the same way. If they have money, other things than price are far more important.

The third and last question is, if selecting between two comparable products, or same product from different vendors, why should I pay more?

Feels better is an OK answer for a consumer, but not within a company and even lesser in public sector. 

Did I choose the right woman/man?

You meet two lovely ladies/man and get in love with both and the feelings are mutual. How can you choose one of them, and not be thinking if you made the right decision?

With several options for software development, you can get in the same situation. Woody Zuill gave the  advice for software development to be agile and trying both options at the same time. An recent example is where Apple had two competing operating systems for the first iPhone, and in the end the OS/X based option won.

I see the benefit, with this approach, but I would also like know if there are any showstoppers with either solution that we can identify quickly.

So a possible recommendation, is to identify eventual showstoppers, before starting two concurrent agile projects and after a few important sprints do we have a better understanding of which solution to select. At some point we have to make our selection.

If you wonder, did I make the right choice much further down the road, you didn't.

Digital is not enough

A lot of companies are talking about the importance of being digital, but they miss the point. A very good example of this is Kodak, who didn't get what digital was about for their end-customers.

They offered Photo CD as a digital product, where you got both prints and a CD with images when developing a film. But a few years after the sales of digital cameras took off their revenue took a deep dive. The benefits for the consumers was not digital as such, it was near zero cost of photos and that images were available for viewing at once. With smartphones, they were also shareable at once, which made Kodak obsolete.

Another example is newspapers. As printing cost and distribution were high, you seldom bought more than one paper. With digital, printing costs and distribution went to near zero, and you could easily read articles from different sources, without any extra cost. 

Digital is about the possibilities for new customer behaviors, not change from paper as a medium to a digital screen. The big question is how existing corporations can cope with these challenges and innovate their business models.

The real cost of buying an IT-system

What is the real cost of  buying an IT-system?

I would say, "Buying an IT-system is like buying a horse". It's often more expensive than you thought and you can see the video on youTube how to buy a horse

You have the cost for licenses and needed infrastructure to run the software. You need installation and configuration of the new system and perhaps some custom development.

Then you need integrations to other systems and changes to existing systems. This could be really expensive.

You don't have a veterinary to call when your IT-system gets ill, but you need to have a plan B when, not if, something goes wrong. 

If the new IT-system replaces an old one, you need to migrate over all information and get rid of the old one. Some people have as much trouble retiring an old IT-system as getting rid of a really old dear horse.

You also need to have a budget for daily maintenance of the system and making changes so you don't  end up with a huge technical dept. If it's a new technology, you also need more education to the IT-staff.

Don't forget the business, non-IT perspective, of the IT-system. The people using the system need training and perhaps new ways of working to get the business benefits out of the system. 

You may even need to change your whole business model and organisation in order to take advantage of your new IT-system.

Do we work according to waterfall or agile methods?

Eating your own dog-food is a classic quote, and we try to adapt to this maxim.

When we started with Architecture Corner a year ago, we didn't have a method or ways-of-working in place. We just shot a few episodes, edited them and published them one by one.

The initial episodes were more a proof-of-concept were we tried the idea of Architecture Corner as a complement to Gregers blog and my own blog.  

Ways of working

Today, we have a established process for each episode with six clear steps. 

Our process for video production with six distinct steps and clear decision points 

Our process for video production with six distinct steps and clear decision points 

This process diagram looks very much like a waterfall processes and we could easily use PROPS or PRINCE as project methods for each episode. I think we all can agree that each activity has to be more or less ready until we start next phase. 

The more we do in idea creation and pre-production, the more efficient we are at the shooting location in production . The production is where the most resources as used together at one place and at one time, so to minimize this is important from a logistics and resource perspective.

The more you plan, the more creative you can be at the shot location.

For example, we have to shoot a whole interview at one, but we can shoot B-foto or do voice over after we started with post production. But, once published we can't make changes to the same video on YouTube. (It's possible to upload a adjusted video on Vimeo, but this is not out primary channel.)

After publishing is done, we can edit the text, image and other metadata for the video on YouTube, as well as add sub-titles, not anything else.  

Of course, follow-up can't be done on something we haven't published. 

But on a high-level, per season, we don't plan in more detail than number of episodes, dates and general topics to discuss like in the video Prelude to season 3.

The answer to the initial question is that we work more according to waterfall within each episode, but are rather agile on a high level.  

Light-weight project management

We are using a kanban board (Trello) to keep track of each activity from idea creation to publishing and follow-up.  Other than this, we use e-mail and different messaging platforms together with Dropbox and Google drive to share information during the whole process. 

As this series of episodes are produced without a formal budget, and by using available time slots in our calendars, we don't allocate resources or follow used time or other expenses.  

Therefore, the PM role is very thin.