Valuing Agility in IT

Every vendor offering you a cloud product touts their ability to provide agility to your IT organization. But, how do you place a value on agility in order to prioritize IT projects? There are a number of economic tools that come up frequently in describing value of software investments. I favor a simple economic approach: Net Present Value (NPV).

Net Present Value is the sum of value provided over time, discounted for the cost of money you’re investing in order to reap that value, e.g. interest. As an IT leader, you may not carry the cost of interest in your budget, but your Line of Business customers are likely affected by it and alignment makes for good partners. Let’s walk through an example.

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The Value in Cost Shifting of Cloud Computing

There are a lot of threads around asking, “Is cloud computing less expensive than on-premise?” The short answer is: it depends. Here’s a quick outline of the why the better question is which provides more value.

In economics, there are two types of costs in production: fixed costs and variable costs. Fixed costs are independent of the level of production. Buying a server is a fixed cost independent of the number of VMs run on that server. Variable costs are the per unit costs of production. The cost of applying operating system patches is a variable cost, it is dependent upon the number of VMs. Investing in fixed costs, servers supporting higher VM density, creates an economy of scale by reducing the variable cost of providing another OS instance to your customers. This is the production side of cloud economics.

On the consumption side, moving to cloud changes the fixed Capital Expense cost of hardware to a variable Operating Expense cost. Tying the cost of the infrastructure to the lifetime of the project reduces upfront costs.

Cloud Reduces Startup Costs
Reduction in Startup Costs

Spreading the costs over the life of the project does increase the terminal costs of the project, however this is not the problem it seems. With the cloud model, it is also simpler close down when the project is no longer providing the necessary value.

Terminal Costs in Cloud
Increase in Terminal Costs Ameliorated by Easier Shutdown

Combining the lower upfront costs and risk incurred of starting a new project by spreading the cost across the life of the project, it is easier and lower cost to begin more new projects. With the simplicity of exiting unprofitable projects, these new projects carry less organizational risk by lowering incurred legacy. More projects, at lower risk = more value creation, faster. Or, as we like to say in marketing: value creation through innovation.

If it’s amazing, but unusable, is it still a cloud?

In Boston this week planning for the new fiscal year, I stayed in a brand new boutique hotel. So brand new that the price was well below any of the local chains, and they hadn’t worked out all of their kinks.

The look and comforts of the room was excellent: clean design furniture, Lavazza in-room coffee, great shower, fireplace, big fluffy towels, the works. It was a beautiful room, and no expense was spared in making guests comfortable in this small but luxurious place. But, then I had to use the room.

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Replacing Google Reader in 10 Minutes

RIP Google Reader.

Even though all evidence pointed to it, I hoped it wasn’t going to happen.

Here’s my coping mechanism: OpenShift + Tiny Tiny RSS

I installed the Tiny Tiny RSS aggregator and reader using an +OpenShift  quickstart +Gunnar Hellekson put together.  If you already have an account, you can have your Google Reader replacement up in running in 10 minutes.

Step 1: Quickstart:

Step 2: Export everything from Google Reader

Step 3: Upload the subscriptions.xml file (found in the exported archive from Step 2). If you’re only reading through the web. You’re done.

If you want to read on your Android devices, two more easy steps.

Step 4: “Enable external API” under general preferences on your newly installed Tiny Tiny RSS server so you can access the contents through apps.

Step 5: Download a reader for your Android devices.  I chose TTRSS-Reader.

Thanks to Gunnar for the OpenShift port, and Simo Sorce for turning me on to Tiny Tiny RSS.

I’ll miss you Google Reader.

Internet of Things and Twine

I’ve been asked by a number of people what is this “Internet of Things?” So, here’s a draft. Where do you disagree?

What if everything could share information?

Internet of things is making sharing information simple by bringing the network capabilities of computers to anything and everything.

Who knows what will happen in uses? Maybe it’s essential that Netflix pauses when the dryer finishes it’s cycle so you know to fold laundry before it wrinkles. But, big opportunities in “quantified self, ” home automation, retail supply chain (hey, I’m expired!), medical treatment, etc.

Basically, if intercommunication is so cheap that you can collect information from everything and take action on anything, what could you do with it?

Many technical revolutions fall into two categories: look what we can do that could never be done before, and look now it’s so cheap that everything can use it. (it’s really a continuum, but that’s “crossing the chasm,” etc).

Twine is smart because they make it simple to add basic functionality in this direction to existing stuff, so lowers the barriers to get started. Since it’s a new idea, we have no idea what all of the possibilities are, they make it simple for consumers to experiment.

Medication examples :

I want my pill bottle to tell my phone to have an alarm to remind me to take the drugs when my phone recognizes I’ve walked into the cafeteria.

I want my pill bottle to keep track of how many pills I have left. I want my phone to track this and remind me to refill early because it has my calendar and sees I have a trip coming up.

I always put stuff down, and can’t find it. I want my phone to ask my home alarm system where my pill bottle is.

I remember taking a pill, but can’t remember if that was today or yesterday. My pill bottle knows.

Drugs expire, send an email.

Drugs see what other drugs are in your medicine cabinet, that are yours (not the spouses) and checks for interactions you forgot to tell your pharmacist about.

Drugs reaching limits of storage temp (power failure?), send a notification.

How do you turn your phone into a tool?

I picked up a Galaxy S III over the summer, and a few minutes every week making the phone do more work for me.  What are your Android tips?

  • Change application view to alphabetical list or grid
    • Apps – menu – view type – select
  • Make sure you set up a password on your phone.
  • Put contact info on your lock screen
  • Create one touch icons for most common calls. I have one that I hit and it calls my wife’s personal phone. You can find it under widgets.
  • Alternatively, you can use the ‘favorites’ list, and have that as a widget on one of your pages.
  • Change the keyboard: Purchase SwiftKey from Google Play
  • Arrange icons so that most used are on the bottom row that stays with every page.
    • Mine are: phone, contacts, Google search, apps, and a folder containing work mail, Gmail, and texts.
  • Put regularly used apps, or apps you need in a hurry, on the front page.
    • Mine include a lot of reading, but also TripIt, RSA token, maps, remember the milk (lists), camera, etc.
  • Epistle to edit and sync text files with my laptop (uses dropbox)
  • For Web stuff I want to read (news articles etc) on the go, I use instapaper (website) and sync with instafetch (app). So, I always have plenty to read on planes.
  • Find news with Zite or Flipboard apps.
  • Create a calendar widget so you can see the next few days without having to open the app
  • I have 2 Remember The Milk widgets: what I have to get done for the day, and what I am waiting on others to do.

Daring Fireball: Open and Shut

John Graber of Daring Fireball has a great (albeit occasionally snarky) post challenging the value of “open” for shareholder value in technology companies.

The key point he starts to discuss, and then backs away from, is the value of externalities contributing to create better products faster.

Tim Wu also hints at this in his piece in the Newyorker, which kicked off Graber’s conversation. I’d like to hear more from both on this.

With an increasing demand for technology solutions to increasingly complex and evolving business problems, there’s a lot of money for whomever solves them. Share the wealth, and I bet we’ll provide our customers value faster now, and as the problems continue to change.