Companies - Lessons of Failure

November 30, 2011

iPad still kicking Android Butt, No End in Sight

I made the prediction this year that iPads would dominate over all Android tablets, mainly because of the poor showing early on in the year and the over-hyped releases to come. Most of that came to pass. Some things I left out were bigger than I thought (hello Samsung Galaxy and Motorola Xoom), and others everyone missed completely (Kindle Fire).

But even with all that guessing and misstepping, the iPad still kicked butt. All. Year. Long.

From comScore’s report on Digital Omnivores: How Tablets, Smartphones and Devices are Changing Media Consumption Habits:

OS Market Share by Digital Traffic
Another way of defining platform market share is through the share of Internet traffic measured through browser-based page views. By this definition, iOS held an even stronger position in the market. In August 2011, the iOS platform accounted for more than half (58.5 percent) of the share of total non-computer traffic in the U.S, with the iPad’s dominance in the tablet market playing a key role in its position. In fact, iPads delivered 97.2 percent of all tablet traffic and even edged out iPhones in delivering the highest share of traffic for the iOS platform (46.8 percent vs. 42.6 percent of iOS traffic). Android OS once again ranked second, delivering 31.9 percent of overall non-computer traffic in August. RIM followed with a 5.0 percent market share. Other platforms, including Windows Mobile, combined to account for the remaining 4.6 percent of digital traffic.

And the graph from comScore, which is the clincher (click for full size):

See the light blue section for Apple? Now compare that with Android. One word: ouch.

iPad represents pretty much ALL of the tablet traffic as of August, 2011. Android isn’t even a dent in the pie. After dozens of tablet releases. Android is winning hearts and minds with the mobile game, but they’re being ignored by the tablet crowd. Maybe the stats will be different by years end, but Android has a lot of catching up to do.

Good luck with that, guys.

October 6, 2011

The Legacy of Steve Jobs, A-Z

Words can’t express the collective loss of this man’s contributions to the world, but here’s my feeble attempt at a tribute to his legacy.

Steve Jobs, from A to Z:

Apple Computer
Bug’s Life
Cars
Digital Signal Processor Chip
“…enthusiastic about what we do”
Finding Nemo
Glasses, wire-rim
“Henry Ford of Our Time”
The Incredibles
Jefferson Award
Khakis and Turtleneck
LSD
Mach Kernel
National Medal of Technology
“One more thing…”
Pixar
QuickTime
“Reality Distortion Field”
“Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations.”
Toy Story
Up!
Vegetarian (well, technically pescetarian)
WebObjects framework
NeXT Step
“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
Zen Buddhist

Thanks for everything Steve. We’ll miss you. 1955-2011, RIP.

Sources:

http://www.macstories.net/roundups/inspirational-steve-jobs-quotes/

http://en.wikipedia.org/wiki/Steve_Jobs

September 16, 2011

Dear Microsoft: It’s not me, it’s you

Dear Microsoft,

I can’t tell you how much it pains me to write this letter. I thought we had a great relationship as developer/software provider. I left my Apple roots in the mid-90s for your brazen swagger and staggering command of the market. Lately it seems like you just don’t care. And by lately, I mean the last 10 years.

Unfair you say? Well, let’s talk about all the times you’ve let me down in the past decade:

Windows Vista: I think it’s fair to say that keeping me as a developer on the same platform for 6 years is pretty bad, but when it makes my customers stay there too and keep me entrenched on old platforms for far longer than I’d like, well that can be downright intolerable. Your market share for XP on the desktop is a staggering 50%. That’s like driving my car from high school…when I’m 35. Your own numbers can’t hide the fact you’re struggling to get people to care. Your incessant need for complexity in upgrade plans, coupled with astoundingly high prices to upgrade, not to mention the requisite hardware changes as well, pretty much made everyone take stock and sit back on their ancient PCs for another few years. Writing software for these clients is about as much fun as shoveling a barnyard full of manure. Wait, the manure pile is at least outside where I can get sunshine and fresh air. You’re less fun than that.

.NET, Silverlight, and a wide variety of aging platforms: Developing on your platforms is like building the World Trade Center on the shifting sands of an earthquake zone. Everyone knows it’s not smart, but we’re stuck with it because of prior commitments. Speaking of commitments, can you keep a platform alive for more than a few years? Let’s list the litany of technologies released and then abandoned by you in the past 15 years: ADO, Silverlight, DNA, BizApp, .NET, J#, XNA. With Windows 8, we’re now going to write everything in HTML5 and Javascript? Hello 1999, we were doing that ages ago, and with you leading the way. But not this time. Hell, you’re having such a hard time following, you aren’t even on the committees anymore. (And you just announced that you’re canning Silverlight and ALL plugins for your newest browser) Are you guys even listening to the conversation anymore or are you just mumbling to yourselves in the corner?

Windows Server: Windows 7 came after we all gave up on Vista, and that’s worked out pretty well now hasn’t it? (See my market share remark above). But on the cusp of Windows 8, you claim you’ve defeated the dragon of Linux? Seriously? We stopped taking Windows seriously as a server platform years ago. The only ones left who care are those stuck with Exchange or Sharepoint in their companies.

Windows 7 Mobile: I’ll give you props for making a gutsy move here. Acquiring a dying company, killing their development platform and shoving yours down their throat takes a whole lot of chutzpah. But Google and Apple aren’t even taking you seriously as competition, and neither are consumers or developers.

Skype: Picking up a company that doesn’t even use your core technologies ought to be a clear signal you’re not making the right move here. eBay couldn’t figure out what to do with them, and we all scratched our heads about that one…what makes you smarter this time? No one else seems to know, the smart money says you don’t either. Gambling is always a sign of a dysfunctional relationship.

Not looking your best, are you Steve? I’ve grown in the past 10 years. You’ve floundered. I’m trying to stay on top of the market trends, meet the needs of my consulting clients, and learn exciting new technologies. You’re nowhere to be found in any of those places. I can’t take this anymore.

So Microsoft, I’m breaking up with you. You used to woo me with a promise of more software, better games, more developer energy. But that was a long time ago. You’ve been sitting on the couch, drinking beer and watching too many Windows Media Player videos. You’re fat, old and tired. I can’t live with that anymore. Apple won my heart back.

Apple did everything right the past decade: a good phone, a good tablet, good operating system and good hardware. They made it easy for me to work on whatever I want by supporting virtualization of any operating system. Most things just work right out of the box on my Mac. I haven’t had that experience with you in years. And most of my developer friends agree on that point. Last conference I went to, 80% of the attendees had Macs. Half of those do Windows development on them. I run Linux and Windows 7 in the background while I work on the Mac. Doing that on a Windows machine makes it want to roll up into a ball and cry like a baby. I can’t take changing your diapers anymore.

I’ve had enough. We’re through. And just so we’re clear, it’s not me, it’s you.

July 19, 2011

Product Development Lessons from the Launch of Disneyland

Ever have a launch that went, well, something other than what you planned? Opening Day, July 17th, 1955

You’re in good company. Consider the story of the Disneyland launch in 1955, and you might feel better about your own personal project issues.

On July 17^th, 1955, Walt Disney opened the doors to the Happiest Place on Earth. Given Walt’s reputation, you’d expect that the whole thing went off without a hitch and everyone slapped each other on the back as the dollars rolled in.

Well, think again.

Disaster Strikes (again and again)

Walt’s disasters were numerous that day, but they hold important lessons for any engineering project, software in particular:

The tickets were presold for the event, but unfortunately someone had counterfeited tickets. More people showed up than were expected.

Lesson: Piracy is something that can happen anytime and potentially ruin your hard work, be ready for it Day One.

As a result of the counterfeiting, instead of the opening crowd of 20,000 expected, almost 35,000 showed up at the park according to Martin Sklar, vice chairman of Walt Disney Imagineering. With a near 100% increase over expected volumes, you can imagine the stress on the employees, the infrastructure and the overall experience that day.

Lesson: Plan for the unexpected on your launch day, be ready for more than you anticipate and be flexible in how you respond. Have contingency plans for things that might go wrong.

The large crowds lead to other problems in the park, specifically the crowding of rides and attractions. Some of the rides (there were only 20 at the time) broke down. Filled beyond its capacity, the ferryboat sank.

Lesson: Engineer for the worst case, and have a contingency plan when you exceed it. Think about what you will do if your server runs out of memory, disk, database space, sockets, or bandwidth. These are important questions to ponder before they happen to you, not after the fact.

A plumber’s strike during the final phases of construction meant that the park could have either drinking fountains or toilets working, but not both. Walt chose the toilets, quipping that folks could buy a soda to quench their thirst instead. (Some) customers complained that Walt did this to intentionally gouge his customers for more profit.

Lesson: Always ensure that the critical parts work. Slip those things that can be worked around in other ways, even if it you might anger the customers in a small way doing so.

On top of all that, it was a treacherously hot day, with the temperature soaring above 100 degrees in Anaheim. Ladies’ heels sank into the black asphalt. But clearly this wasn’t the end for Walt or the park, and they continued to improve the experience small bits at a time, until the reputation of the park became what we know it to be today.

Lesson: A disaster doesn’t have to be the end, work to fix the problems, be honest and do good work. Eventually, your diligence will be rewarded.

January 19, 2011

Two Major Privacy Violations You Probably Didn’t Notice

Somehow, I managed to channel my security hero Bruce Schneier, who manages to find all that is amazingly stupid and insane about security, from the TSA to RSA. And I accidentally stumbled across some major privacy violations that didn’t appear to be privacy violations on the surface.

We take a lot of things for granted today when it comes to multiple device access and our privacy. On the one hand, we expect our data to synchronize seamlessly from device to desktop and back again. But at the same time, we don’t want our private data stored any longer than we need it. As it turns out, those two tenets are in direct conflict with each other in a sinister and subtle way.

Suppose you use Skype and have it on a mobile device and a computer. Great–You sign into your Skype account from a laptop and see your contacts. Doing the same from your iPhone and you get the same list. No surprises there, right?

Now let’s say you had a conversation (IM-based chat) with a business associate about some sensitive account data relating to a current client. And just in case, because you use your mobile device around the very same client, you want to make sure that conversation isn’t visible at all, ever. So you delete the conversation from Skype on your laptop.

At this point, you haven’t logged into your Skype on the mobile device. You’d expect that conversation data to delete in both devices, right?

Turns out, you’d be dead wrong on that one.

Skype saves these conversations on their server and puts them on any device where you have their software installed. “Ah!” you say, “but you forgot about the Privacy options!”

The Iron Clad Guard of Privacy, right?

True enough, I didn’t mention them–so now suppose you have “Keep History For: No history” set in your Skype options (the Iron Clad Privacy Guard(tm)!). And you cleared your conversations out from Skype on the laptop. And you’ve never logged into Skype using your mobile device…you’re good now, right?

Nope. That conversation is still on Skype’s servers, but gone from your laptop. Next time you login to the mobile and go back in the history, it’s still there! And here’s the kicker: you can’t get rid of it either!

This isn’t unique to Skype. I was able to reproduce the same thing via Sent Messages in Facebook. I specifically had deleted a bunch of old conversations I had with friends from my web browser version. One day, I went in via my iPhone and voila, there they were all staring me in the face! Facebook is storing your conversations from years ago (mine were 18+ months old), even when you’ve deleted them from your Inbox and Sent folder.

Why oh why would they do it?

Delete means delete, right? Not really as it turns out. There might be reasons these companies want to hang on to your data for a bit longer than when you want to…

Legal reasons: If you did something illegal, and law enforcement wants to come a-knocking, Facebook and Skype are covering their proverbial backsides.
Ad targeting reasons: Just like GMail searches your inbox for reasons to post an ad to you, Facebook is definitely doing the same. Skype might be, but since they don’t have ads in their software, that seems less likely.
Oops reasons: They might want to be able to restore your “accidentally deleted” data if you call customer support in a panic. This probably makes it easiest to look the customer in the eye if they discover it, but it’s probably the least used reason of the three, sadly.
Other, Secret, More Sinister reasons: I’m no paranoid conspiracy theorist, but there’s always the outside chance of some other reason they want to keep your data around that I haven’t mentioned, so we’ll leave this catch-all for good measure.

Regardless of the reason, these create huge loopholes for those concerned about actual privacy. The fact that neither of these is mentioned in the terms of service is not surprised, but definitely problematic.

Developers: Make sure your apps don’t do bad things like this. When people find out, the negative publicity isn’t worth the supposed safety margin gained above.

Next time you think that “private” conversation is cleared from Never-Never-Land when you turn on those Privacy Options, you’d better think again.

January 5, 2011

2011: Year of the iPad

Happy New Year to everyone, first of all. And second, I hope you managed to get your hands on an iPad in the past 6 months because if you haven’t, you’re going to want one.

Why? Because 2011 is definitely going to be the Year of the iPad. Not by an inch, more like a mile. Let me explain why…

Now that I own an iPad, I finally get the hoopla over these devices. I wasn’t impressed when they came out and wasn’t really planning on getting one for the holidays. Thanks to a generous visit from Santa, who despite my best efforts to the contrary with acerbic blog posts considered me worthy of one under the tree, I now own one along with my wife. And I’m impressed. Very impressed.

iPad: The Must-Have Intermediate Computing Device

I’ll coin a new term for tablets: intermediate computing devices, although I’m hoping someone comes up with a better one in the future. To me, the tablet represents a new class of device that isn’t quite in the same class as netbooks and mobile PCs, although categorically they tend to be lumped together. These devices fill a gap where a PC is too cumbersome, but a smartphone isn’t powerful enough, or even large enough. The iPad is clearly king of the tablets right now. I say that, not as an Apple Fanboi, but as a solid convert to the notion this device does actually have a place in your house when you already own a desktop, laptop, media computer (e.g. AppleTV), and smartphone.

Each platform has tremendous utility within its own domain (smartphones are great for keeping in touch on the go, but lousy for typing blog posts, and the laptop is strong where the smartphone is weak, etc). It wasn’t until I actually owned the iPad that I suddenly found places where I really wanted more than my smartphone but much less than my laptop.

Let’s look at a specific example: my wife and I both love Rummy Tile. Getting the boxed game out after the kids are in bed is a bit of a hassle, and we can’t play on anything except a very flat and hard surface. Enter the iPad: each of us downloaded an iPad version and can play against each other sitting in bed via Bluetooth. Comfort and convenience, meet marital competition (For the record, my wife continues to beat me overall, even at the electronic version).

Not satisfied with that? How about this: I leave my email open on my laptop downstairs all the time. Doing so prevents my iPhone from getting email, so I find myself having to run down 2 levels at night to shut down Outlook so I can see email in the morning when I get up. Not with my iPad! I installed Team Viewer and can now remotely login to my laptop, shut it down, or do anything I need on the computer (like grab an attachment from an old email, which I frequently need as well).

Of course, don’t forget the real estate improvement over the smartphone genre: web browsing is a treat by comparison. My wife and I need to lookup things all the time, and the iPad is the perfect device for on-demand, quick-and-easy web surfing. No waiting for boot time of the laptop, no struggle to read the data displayed on the smartphone.

And…The Competition Sucks

After I got the iPad, I thought I’d check out the competition and see how the lay of the land was looking by comparison. It’s not good for the Android folks right now:

The Dell Streak requires a data plan from, yep, you guessed it, AT&T. It’s cheap if you get the two year data-only plan at $30/month, but as pricey as the iPad otherwise.
The Google Android tablet has very mediocre reviews to date on Amazon. When the “best helpful review” for it says, “For the price it’s not bad…”, you know you’re in trouble.
Two of the most promising contenders that generated huge buzz (Notion Ink and the Kno (aimed at college students)) just made the Wired Vaporware 2010 list. Oops.
The Maylong $99 tablet sold at Walgreens got scathing reviews earlier this year, and continues to hold the distinction of “worst gadget ever“.
Viewsonic’s G-tablet isn’t exactly burning up sales with comments like “With some sweat equity, you can get it to work…”, and “Next gen hardware, but software needs improvement”. At it’s current price, you can get a 3G iPad, and save on your Advil bills to offset the pain.
And other low-end competitors are getting smacked around too, like the Augen NBA7800ATP.
EDIT: For those wondering why I omitted the Samsung Galaxy, see the comments.

Out of the box, the iPad just works, which isn’t something you can say of most tablets mentioned above. At the current prices and capabilities, the Android tablets aren’t a clear win as a lower-end device. The experience is often so poor as to be unusable, and the higher end models are not significantly better than the iPad for nearly the same cash outlay. Never mind that engineers looking at the Android have discovered major issues with the compositing and view system which are primarily software-based, giving extremely poor responsiveness in the touch interface and the animation rates. Android has a ways to go here–either due to hubris or lack of experience.

And while Windows 7 mobile at least got that part right, they are still lagging heavily in this market and will likely remain so for the balance of the year. The market trends clearly favor Apple’s iPad as the hottest “mobile PC device” available, for 3 quarters running.

In short, no one else has a good handle on the market and user experience aside from Apple.

The Golden Last Frontier of Mobile App Development

Apple App Store, the Place We Love to Hate Lastly, what about the developer community? Well, you can complain about the App Store all you want, but the Android Marketplace still isn’t a whole lot better than when I last wrote about it. Furthermore, the app selection for Android is still considerably worse than than for iPad.

But the real reason you want to get in on the action is that iPad apps aren’t cheap, and therefore command higher revenues from the App Store. The iPad versions of apps are often selling for several multiples (sometimes deserved, sometimes not) over their iPhone counterparts. Even though the average across all apps is only $1 higher for iPad apps, my experience looking at the top-selling apps is somewhat different. Here are a few examples that clearly show a difference if you get in the good graces of the world:

App Name	iPhone Price	iPad Price
Angry Birds:	$0.99	$4.99
Plants vs. Zombies	$2.99	$9.99
Fruit Ninja	$0.99	$2.99
Cut the Rope	$0.99	$1.99
UNO	$0.99	$4.99

Some are the same in both (SlingPlayer, LogMeIn) but clearly the experience is vastly different.

In addition to the gaming possibilities of the device, the iPad opens up a whole new world for application development where the increased screen real estate makes a big difference (Netflix avoided the iPhone app for a long time and rightly so until the iPad came along…now it’s one of the top rated iPad apps in the store, and for good reason). And there are precious few decent iPad utility applications out there, making a rich market for those who have the know-how and willingness to surf the treacherous waters of Jobs & Co.

Unless a miracle happens, it looks like Apple has the tablet world by the tail for at least this year. In 2012, assuming the Mayan gods don’t come to punish all of us for bad John Cusack movies, the landscape may change dramatically but for now it’s Steve’s world and we’re just computing in it.

October 27, 2010

Guest Post on SoftwareByRob: How Love Can Kill Your Product

I have a guest post on Software By Rob (Rob Walling’s blog) today about my former photography business and how my blind love for the product ended up being the reason it tanked.

I like to point out the lessons of failure for everyone so we can learn for our mistakes, especially my own. Enjoy.

September 1, 2010

How I Learned to Stop Worrying and Love the New Axis of Evil (Oracle)

There’s a wide sense of lament since Oracle has taken over Sun and their intellectual property, including MySQL, Java, Solaris and their hardware sales business. I’d say the average observer of this process might use the terms “slow moving train wreck”. I doubt they are far off on this one.

You know what? I think Oracle taking over Sun and acting stupid is actually a GOOD THING.

No, really I do. Let me explain.

Sun has a long history of innovation with Java. They also have a long history of missteps (take your pick, but I personally like the layoffs that happened biannually but basically culled the best folks who took packages to get out of the toxic environment) and flat out screw ups (Hello? Selling off your $1B/year professional services business because you’re not a “software company”? Wish I had those kind of problems). I have a number of personal friends who worked there (mostly past tense, but there are still a few stragglers left) and I don’t wish their employer to crater. No, not at all.

So why is Oracle’s behavior regarding the death of Open Solaris or suing the crap out of Google for the use of Java in Android a good thing? Easy: We now have an opportunity to spur the development world into action.

The Empire Formerly Known As Evil

Flashback to 1995: Microsoft (the former and still ranking Evil Empire) was king of the developer world. Open source was a twinkle in the eyes of a few idealists. Developers paid handsomely to Attack of the Clippy Zombies buy into the Visual Studio paradigm. Or they bought from a competitor (Borland). C++ and C were the de rigeur choices of language at the time. Enter Java and the entire development world was turned upside down. No one saw Sun as the disruptive innovator at the time.

Of course, other factors played into it over the years: the rise of the internet, the Dot Com boom and server sales tied into Java usage, the rise of open source and the overwhelming support from the community regarding Java, driving huge amounts of frameworks still in use today. But there was always a motive: fight the evil empire. We fight them because the evil empire doesn’t “get it”. Remember Microsoft’s internet strategy in the late 90s? (From a blog post regarding the missteps of Microsoft, particularly Project Blackbird)

Adobe’s Mark Anders about his time at Microsoft. Anders is well known as one of the inventors of ASP.NET, along with his colleague Scott Guthrie. However, when he joined Microsoft in the mid nineties he worked initially on the project codenamed Blackbird. This was a kind of Windows-specific internet, and was surfaced to some extent as the MSN client in Windows 95. Although the World Wide Web was already beginning to take off, Blackbird’s advocates within Microsoft considered that its superior layout capabilities would ensure its success versus HTTP-based web browsing. It was also a way to keep users hooked on Windows. Anders told me that he never believed in Blackbird and argued that Microsoft should support HTTP instead. According to him, the executives at the time did not want to listen at first, but Blackbird had severe performance problems

Darth Ellison and the Empire Stuff like this always pisses off the right people. Microsoft didn’t get it, and people got mad. Microsoft’s stupidity in thinking they could control the internet spurred lots of innovation from other companies to make the *real* internet even more valuable. Eventually Microsoft capitulated and followed suit with everyone else.

And that’s precisely what I’m counting on here for the Oracle debacle. Because Oracle isn’t getting it either (at least for developers). Tim Bray’s article today has a great quote from the Empire itself:

“You don’t get it. The central relationship between Oracle and its customers is a business relationship, between an Oracle business expert and a customer business leader. The issues that come up in their conversations are business issues.

“The concerns of developers are just not material at the level of that conversation; in fact, they’re apt to be dangerous distractions. ‘Developer mindshare’… what’s that, and why would Oracle care?”

Let’s Shake Things Up

Java not good enough for Android? Fine, let’s make a new language that finally innovates on the mobile device, unlocking us from the collective disasters of Objective C, mobile Windows, and bloated Java ME. If Java 7 is going to die at the hands of Oracle, maybe that will motivate some development group to actively fork it in a meaningful way. Or finally develop the successor language to Java that revolutionizes the software community the way Java did in the mid-90s.

This complacency about Java, MySQL, and the state of Sun products has got to stop. It’s time to shake things up. And the last time that happened, exciting times were had by all.

I can’t wait.

June 9, 2010

The Outsourcing Low Cost Lie

If you walked into a store and asked to have someone make you a suit and you agreed on a price of $100 and week’s sewing time, a week later you’d expect to walk back in and be trying on your new suit after parting with a $100 bill (at least in America).

What if you went into a different store, after that initial price quote and they offered to make it for $25? You’d think, “Great! One fourth the cost of that previous guy! I’ll take it instead.”

How would you feel if a week later you came back and they said it would be another week and $50 instead? Think you’d be mad?

How much madder would you be after TWO weeks, and now the shop owner is telling your it will be $75 and one more week, but this time he’d definitely get it done. And after you get it, you notice that the pocket is sewed on slightly funny and the trousers don’t fit quite the way you’d expect. Would you be steaming mad now?

Yeah, I would too.

This is exactly what happens with outsourcing projects in most software companies. If you ask companies why they do it, invariably they answer that outsourcing will save money AND time over local resources. That’s an unbelievably huge lie. It’s time to tear that apart.

Forgetting the cultural problems you’re going to encounter with outsourcing for a minute, let’s say you have a project scoped by an outsourcing firm. They bill their engineers to you at $25/hour. Local contractors run you $100/hour, so you’re thinking to yourself, “Wow, 75% cost savings! Sign this outsource guy up!”

Whoa, not so fast there, cowboy. Let’s throw out some project statistics from the Aberdeen Group. Unsurprisingly, reducing IT costs is the primary driver behind outsourcing for 82% of companies in the U.S. But, as Aberdeen continues,

Nearly 50% of outsourced projects fail outright, or fail to meet expectations
76% of companies said that vendor management effort and costs were much higher than expected
30% reported ongoing issues with outsourcer management processes (e.g., inadequate governance and conflict resolution procedures)
51% reported that outsourcer was not performing to expectations

In the end, the average cost savings for projects was a mere 26%.

That might sound like a reasonable number, but consider that first point more closely: Nearly 50% of all outsourced projects fail outright or fail to meet expectations in the first place. Essentially, you’re taking the same gamble as red vs. black in Roulette about your project’s success right off the bat, and only then if you pass that hurdle, you’ll get on average, 25% savings over having it done locally.

So wait a second, where did my 75% cost savings disappear to? Let’s do the math:

Original project cost (outsourcer estimate): $10,000. (400 engineer-hours @ $25/hour)

Actual project costs: $30,000 (50% overrun on time and 100% overrun on people–longer than expected, 2x as many engineers as originally scoped, which is another finding of Aberdeen’s and other companies’ experience, so 1,200 engineer-hours @ $25/hour)

Unexpected onshore management costs: $6,000 (about 20% of project cost, from spending more time managing expectations, requirements, design reviews, documentation, etc)

Total actual project cost: ($30,000 + $6,000) = $36,000.

Estimated project cost, if done locally: $40,000 (400 hours @ $100/hour)

Expected cost savings: $30,000

Actual cost savings: $4,000 (($40,000-$36,000)/$36,000) = 11% (for the clients I’ve worked with)

These numbers have been vetted by two recent clients of mine (due to NDA restrictions, I can’t mention either by name but one is a large entertainment conglomerate based in NYC, the other is a worldwide financial clearinghouse firm). Both have substantial amounts of outsourced projects and both report little actual cost savings shown by front-line managers, huge management issues, and non-trivial project failure rates. And yet, both continue to outsource because upper management believes they’re saving a lot of money through outsourcing.

Think about this for a minute: If you have 4 projects you outsource (let’s assume they are all the same: 400 hours each, and we’re using an outsource firm at $25/hour), their estimated cost of $10,000 each, and their actual cost $36,000, here’s what you get: Your budget was for $160,000 and you believed you’d have $120,000 to spend on other projects (foolishly). Here’s the harsh reality:

2 of your 4 projects have high probability of completely failing (let’s assume that they didn’t expend the same cost above, but perhaps only half before they got canceled, so say you got halfway through each and canceled them, burning $36,000 total between them)
Of the remaining two, you get what you asked for but at a cost of $72,000 instead of the promised $20,000.
Total budget spent: $108,000. Expected budget spend: $40,000. (Difference: +270% over expected costs)
Actual remaining budget for other costs: $52,000. Expected remaining budget: $120,000. (Difference: -43% less than expected available funds)

Assuming you budgeted all your expected remaining project cash on other things, congratulations, you’re now over budget! Welcome to every CTO and CIO’s nightmare. And none of this addresses the other problems: communication lags of several days to answer questions, lack of face-to-face interaction to solve problems quickly, miscommunication over simple requirements that you consider obvious but were missed in the implementation, and so on. Are you really saving money here?

Let’s call a spade a spade: Outsourcing just doesn’t save you the kind of money you think it will.

UPDATE: Thanks for all the comments about my crappy math. Yes, it’s fixed now.

April 27, 2010

Top Ten Reasons Babies are better than iPads

Top Ten Reasons Babies are better than the iPad

Babies eventually grow up to be better than their fathers.
Babies get cuter as they get older. Think those fingerprints on your screen will get any cuter?
Babies don’t have a daily purchase limit.
After you get a baby, most people are satisfied for awhile and don’t want to upgrade for a long time.
Babies make other people smile when they see them. iPads just make people ask, “What’s that?”
iPads look dorky in strollers.
Putting an iPad on your back makes you look like a Borg.
Babies don’t care if you use Flash, Objective-C, or Lua. Babies just want you to talk to them in any language.
Babies don’t require you to dress in black turtlenecks, khakis, or attend MacWorld for any reason.
Babies are a LOT more fun to make than standing in line to buy an iPad

AND!

Top Ten Reasons iPads are better than Babies

iPads never require college educations. The closest you get is $4.99 for the Encyclopedia app.
You can shut the iPad off at 10pm and turn it back on at 7am every day, without social services knocking at your door.
When the iPad is hungry, you can plug it in and leave it alone for two hours.
One word: Diapers.
The iPad will never go on a first date or drive your car. Ever. Not even with iPhoneOS 4.0.
You’ll never hear the iPad asking where it came from.
The iPad will never walk in on you having sex.
Trying to swipe a baby will land you in jail.
Best game with a baby: Peek-a-boo. Which gets boring pretty fast. Solitaire, on the other hand…
You can’t make menstruation jokes about babies.