I have been involved in a few projects that are considered digital transformation. The term has a wildly convoluted meaning inside the industry. Some people think that this is about bringing about Agile software practices to laggard organisations, others believe that it is all about converting monolithic systems to micro-service oriented applications and, still, others think it is yet another baseball bat to beat the hands of IT staff. Whatever they think, I have rarely seen people talk about the financial budgets of a digital transformation projects. In this post, I going to open the window into budgets.<\/p>\n
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Software has a cost. In software architecture, when we create systems, we are development against factors: cost, time-to-market, maintainability, flexibility and so on. We tend to calls these features quality properties. There is always a trade-off in systems architecture. There is no such thing as absolutely zero cost software. We, consultants, attempt to explain this to several clients, but often our words of advice goes for a button. Software has a lifecycle and therefore a time of relevance. Eventually, software goes redundant through age or outside influences. Let\u2019s have a look at typical circumstances where clients are very focused on time-to-market and yet they are careless about the process and budget.<\/p>\n
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So what sudden circumstances causes a client to suddenly think of new project? In no particular order, these are the usual suspects of reasonable causes:<\/p>\n
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Software is an amalgamation of executable bits. All bits eventually rot away into irrelevancy when there is no viable revenue. The ROI #1<\/span><\/a>becomes severely negative (ROI = Revenue – Cost). In other words, we architects, can accidentally build premature time-bombs into our architecture, because we forget that eventually technology becomes redundant. The real question is how do we inform our clients? How can we graciously tell them to replace ageing software, reinvent like Madonna<\/a>, and take on the next hill climb in order to get on top of the next plateau. If we inform the client and they still refuse to the budge, and we know we are correct in our strategy, then that is, indeed, another problem: a business relationship.<\/p>\n ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company’s profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit \/ Cost of Investment) x 100. In other words, you may lose your investment if you do not realise how much the process, software development is going to cost you. If you project over runs, then you will go into the red.\n<\/p><\/div>\n<\/div>\n <\/p>\n <\/p>\n <\/p>\n Let\u2019s play a game of imagination and empathy. Assume that I am the CTO of fictional Xanadu Uthixo Enterprise<\/strong> (XUE) and I want to hire a crack-squad engineering team. Whilst my IT budget isn\u2019t infinite, I want people with decent skills, ethics and behaviour. <\/p>\n <\/p>\n Let\u2019s look at resourcing at software development and we will assume that everyone in this team is contract hire. Let’s assume that we use median contract rates as a ball park. If we want the very best talent, then it cost more, but how much does the team cost overall? <\/p>\n <\/p>\nTraditional Budget<\/h2>\n