Comments on: The price of SOA? http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/ Andy Hayler, founder of Kalido and The Information Difference, gives his views on the enterprise software market. Issues covered include data warehousing, master data management, business intelligence and data quality. Tue, 14 Oct 2008 10:41:42 +0000 http://wordpress.org/?v=2.0.3 by: Ad http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27356 Mon, 16 Apr 2007 10:36:37 +0000 http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27356 The first pedestrian will never pay for the full bridge. The lesson from this: investment for break through improvements (apart from the question wether of not SOA is break through) should be financed from a corporate budget and never from an individual project budget. Also investments in the companies "sewage systems" and should be financed from such a budget. Never ever put a surcharge to make up for the costs of teh IT dept. for on any purchase where IT has some kind of intermediate role (e.g. when hiring external staff do'nt charge the users or the projects with an amount per hour on top of the external tariff; this is the fastest way to have business users bypassing IT and start hiring their own extetnal contractors.)IS SOA breakthrough I don't know. When i look to the problems companies has to get data from one internal silo to another I doubt that any user is interested in breaking up these silo's into smaller pieces (he will suspect and I tend to believe he is right) that the data mess will only be worse. After all integration takes place on (master)data(definitions) and not on technology either EAI, ETL, Messaging or SOA or applications either SAP, Oracle or whatever acronym or vendor you can come up with. The first pedestrian will never pay for the full bridge. The lesson from this: investment for break through improvements (apart from the question wether of not SOA is break through) should be financed from a corporate budget and never from an individual project budget. Also investments in the companies “sewage systems” and should be financed from such a budget. Never ever put a surcharge to make up for the costs of teh IT dept. for on any purchase where IT has some kind of intermediate role (e.g. when hiring external staff do’nt charge the users or the projects with an amount per hour on top of the external tariff; this is the fastest way to have business users bypassing IT and start hiring their own extetnal contractors.)IS SOA breakthrough I don’t know. When i look to the problems companies has to get data from one internal silo to another I doubt that any user is interested in breaking up these silo’s into smaller pieces (he will suspect and I tend to believe he is right) that the data mess will only be worse. After all integration takes place on (master)data(definitions) and not on technology either EAI, ETL, Messaging or SOA or applications either SAP, Oracle or whatever acronym or vendor you can come up with.

]]> by: admin http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27132 Fri, 13 Apr 2007 16:57:45 +0000 http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27132 Indeed! I did an enterprise deal while at Shell with Business Objects. The way things worked, the cost of the deal was to be recovered from the Shell operating companies who wanted to buy licences. Just as in your case, of course, the marginal cost to Shell was zero. What happened? Business Objects distributors found that they suddenly were competing with an internal (Shell) competitor. They found that out internal price Shell centre were charging, and offered licenses to the operating companies at a dollar less than this. Now of course the Shell operating companies could now buy licences at one paper price from their parent company (no effective cost to Shell at all i.e. just a paper chase exercise) or pay real Shell money out to Business Objects distributors instead at one dollar less per license. Guess which they did in droves? I even had Shell guys calling me up asking me to match or beat the distributor price. A really great use of company time and money: let's negotiate with our colleagues, and then give fresh money away that the company has already paid to buy software that we already own. An object lesson in large company realities. Indeed! I did an enterprise deal while at Shell with Business Objects. The way things worked, the cost of the deal was to be recovered from the Shell operating companies who wanted to buy licences. Just as in your case, of course, the marginal cost to Shell was zero. What happened? Business Objects distributors found that they suddenly were competing with an internal (Shell) competitor. They found that out internal price Shell centre were charging, and offered licenses to the operating companies at a dollar less than this. Now of course the Shell operating companies could now buy licences at one paper price from their parent company (no effective cost to Shell at all i.e. just a paper chase exercise) or pay real Shell money out to Business Objects distributors instead at one dollar less per license. Guess which they did in droves? I even had Shell guys calling me up asking me to match or beat the distributor price. A really great use of company time and money: let’s negotiate with our colleagues, and then give fresh money away that the company has already paid to buy software that we already own. An object lesson in large company realities.

]]> by: Nigel Thomas http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27130 Fri, 13 Apr 2007 16:38:56 +0000 http://andyonenterprisesoftware.com/2007/04/the-price-of-soa/#comment-27130 A former employer once sold a pile of licences to a major investment bank - buy 2, get 7 free was more or less the pitch. Hey, it was the last day of the quarter and we needed the money, dammit. The bank used the first licence on a project, and the second to build a 'centre of competence' which would be able to blaze a glorious trail for subsequent project teams to follow - and of course the CoC would charge them for the licences and their expertise. Sadly they tried to internally sell the licences at (price/9) - the average cost - rather than zero (the effective marginal cost). So over £1 million of fully paid for software sat on the shelf - other projects found it cheaper and easier to buy competitive products (with real money) than to hand over internal funny money. Show me an internal cross charge and I'll show you its unintended side effects... Regards Nigel A former employer once sold a pile of licences to a major investment bank - buy 2, get 7 free was more or less the pitch. Hey, it was the last day of the quarter and we needed the money, dammit.

The bank used the first licence on a project, and the second to build a ‘centre of competence’ which would be able to blaze a glorious trail for subsequent project teams to follow - and of course the CoC would charge them for the licences and their expertise.

Sadly they tried to internally sell the licences at (price/9) - the average cost - rather than zero (the effective marginal cost). So over £1 million of fully paid for software sat on the shelf - other projects found it cheaper and easier to buy competitive products (with real money) than to hand over internal funny money.

Show me an internal cross charge and I’ll show you its unintended side effects…

Regards Nigel

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