We don’t know which number is “right,” but to make it acceptable to you, we pretend it is certain and we take on the risk. We can only do this if the number is sufficiently padded (and, even then, we go wrong). If the risk pays off, then we get a fat profit. If it doesn’t, we don’t get any profit and may take a loss. If it’s really bad, you don’t get anything and we end up in court or bust.
The alternative is that you take on the risk—and the mess—and do it yourself. Unfortunately, another sad truth is that in-house IT is generally even worse than specialist providers. For a software company, development is a core competency, Such companies live or die by their ability to deliver software and if they are perform badly, they cease to trade. Evolution weeds out the poor performers.
Corporate IT on the other hand rarely destroys a business, although it may damage profits. Indeed, Capers Jones’s research also suggests specialist providers are generally better than corporate IT departments.
Sales folk might be absent, but the whole estimation process is open to gaming from many other sources and for many other reasons. The bottom line is that if you decide to take on the risk, you may actually increase risk.
I know this sounds like a no-win scenario. You could just sit on the fence and wait for Microsoft or Google to solve your problems with a packaged solution, but will your competitors stand still while you do? Will you still be running a business when Google produces a free version?
By the way, beware snake oil salesmen selling off-the-shelf applications. Once people start talking about "customization" or "configuration," you head down a slippery slope. Configuring a large SAP installation is not a matter of selecting tools, options, and then ticking a box. Configuring large packages is a major software development activity, no matter what you have been told. The people who undertake the configuration might be called “consultants,” but they are really specialist software developers.
About the author
For over twenty-five years, Allan Kelly has held just about every job in the software world, including: system admin, tester, developer, architect, product manager, and development manager. Today, he is based in London and works for Software Strategy Ltd. helping companies adopt and deepen agile and lean practices through training, consulting, and coaching. He specializes in working with software product companies, aligning company strategy with products and processes.
