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    Arctec Views

    March 27, 2004

     

    In this issue:

     

        * Finding the Buy/Build Balance

        * Enterprise Architecture News

        * Arctec Group News: Arctec PlansArchitecture Roundtable Session

     

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    Arctec Group is an architectural services company focused on providing objective and pragmatic Enterprise Architecture advice. With this newsletter, we aim to serve our clients, partners, and colleagues by providing our view on current issues and best practices in Enterprise Architecture as well as aggregating interesting news from around the globe.  We hope you find this newsletter useful and enlightening.  Links for providing feedback, subscribing, or unsubscribing are available at the bottom of this email.

     

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    Finding the Buy/Build Balance

     

    Introduction

    This month we will examine architectural factors to be considered in determining an effective Buy/Build Balance for your organization. While many enterprises view technology choices as Buy versus Build, it is much more useful and accurate to view these choices through the lens of a Buy/Build Balance. Through assessing the necessary resources and activities required in an enterprise project, the total cost and impact of Buy/Build decisions can be seen in a more precise setting.

     

    “Buy” projects of any scale inevitably involve some percentage of effort towards development and customization - activities that are frequently associated with “Build” projects. “Build” projects on the other hand may be comprised mostly of custom code, but also involve 3rd party packages, components, operating systems, databases, and enterprise applications either as part of the “Build” package or as an integration point.

     

    Buy/Build Factors

     

    Culture, Identity, and Competitive Advantage

    A factor that inevitably influences decision-making but is often not discussed is the relationship between core IT competencies (development, package implementation, or others) and the company’s culture, identity, and competitive advantage in the marketplace. Is it an advantage to retain core competence in the production of software?  Is your industry competitive or volatile enough that you are unlikely to find suitable package applications? Many questions can be examined to arrive at a base understanding of what information technology competencies are value-added or commodity to your company. This collective understanding can dramatically improve the success of planning and execution, and insure priority and investment is given to the appropriate activities and technologies.

     

    Organizational Skills

    The internal and external skillsets necessary to define, develop, manage, and operate a software system have direct bearing on the Buy/Build Balance. Baselining the level of experience required in order to implement and operate the system against your organization’s (and its partners) abilities is an important indicator to assess for a Buy/Build decision. Specific competencies should be examined, including an understanding where broad versus deep experience is required, in each phase of the project including ongoing maintenance.  Skills availability in the proximate market is also a consideration when choosing packages and corresponding resource requirements.

     

    Business Analysis

    Whether the software is primarily developed internally or purchased commercial off-the-shelf software (COTS), business analysis is required to ensure that the system accurately handles the business needs, goals, and scale. Typically, 40% of projects are spent in analysis and design activities, and these activities still need to occur even in the case of a “Buy” scenario. While design time may be reduced due to features and constraints in the packaged software, it will not approach zero since design is required to understand tradeoffs and options in the package. Analysis time is more likely to remain the same for a given project with either the Buy or Build approach emphasized.

     

    Design Options

    Flexibility in design options is commonly seen as an advantage for a classic “Build” scenario. “But with a little time, we could make it do X” is a recurring theme in such projects. Practically speaking this is not always the case, however. Since enterprise projects deal in tight timeframes, an approach which is geared towards “growing wheat to make bread” may end up with less functionality options due to time and budgetary constraints, or may wind up getting cancelled due to frequent changes in scope or direction. A well thought-out package selection process which views the packages integration and business rule and feature flexibility as high priority items can achieve a similar or better choice of robust design options than many “Build” scenarios. It is more important to consider architectural constraints/limitations when choosing a package that represents a core component within the architecture.  Alternatively, if a feature rich package is proven to meet the functional and non-functional needs for its purpose, well-designed interfaces can help bridge the gap.

     

    Quality Assurance and Remediation

    In effect, by licensing a software product, your organization is licensing not just the software but the effort and resources of the vendor’s QA department as well. This provides the advantage of allowing your own QA team to focus more effort toward testing business logic and relatively less effort on the technological “plumbing.”

     

    The flip side to this scenario is that when bugs are discovered in a 3rd party product, then it is necessary to engage the vendor; and it is up to the vendor to prioritize and provide a fix. This prioritization will be positively or negatively driven by the external market’s concern for the fix, which can hinder the response time for an individual customer and lead to the customer feeling a lack of control.

     

    Ongoing Maintenance and Upgrades

    A perceived large advantage for licensing software is typically viewed as the ability to harness the software vendor’s upgrade cycle. In practice this is an important benefit, but upgrading software impacts the organization beyond only development costs. In a classic “Buy” scenario it is still necessary for the enterprise to design their specific implementation, thoroughly QA the product, and manage deployment and support. Some or all of these activities can certainly be outsourced to the vendor, but this should be determined when establishing reliable plans and estimates. Underestimating this effort and investment can lead to making a premature Buy/Build decision, or tarnishing an otherwise successful implementation.

     

    Market Inertia

    It is absolutely critical to understand the motivations of your partners. When evaluating vendors, this is determined by examining the market that the vendors are supplying, and the inertia created by the collective market demand. Even if a solution is an absolute match for your business today, the evolution will follow the market investment, and you must understand this direction to appropriately assess your success over time. Understanding the degree to which your needs match or do not match the market direction is a critical factor in determining your appropriate Buy/Build balance. This can also help you assess your ability to take advantage of the “pilot-fish effect” of small ISVs providing cutting-edge add-ons to market-leading solutions (following the “big fish” of the market).

     

    Total Cost Savings

    The cost savings metric is generally trumpeted by champions of both approaches as a major factor. Through this essay we have shown that it is important to look beyond individual metrics and look at a Total Cost of Ownership view when evaluating your Buy/Build Balance. TCO calculations are often created with an agenda slanted a specific direction, which can minimize many of the factors (and therefore minimize the understanding of corresponding investments) discussed in the preceding sections.

     

    Conclusion

    The above factors describe some of the important considerations which go into establishing the Buy/Build Balance. Understanding the impacts of Buy and Build on the agility and market advantage of your business as well as the internal design, development, and operational processes clarifies where to balance the true strengths and weaknesses of these options and your individual organization.

     

    -Patrick Christiansen and Gunnar Peterson

     

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    Enterprise Architecture News

     

    Debunking Outsourcing Myths

    An alternative viewpoint to commonly reported outsourcing stories.

    http://www.foreignaffairs.org/20040501faessay83301-p0/daniel-w-drezner/the-outsourcing-bogeyman.html

     

    Software Architecture as a Garden

    Bill Venners interviews Luke Hohmann on Growing, Pruning, and Spiking your architecture. Enlightening metaphors for enterprise architects.

    http://www.artima.com/intv/architecture.html

     

    Bill Gates Returns from Think Week

    Interview with Bill Gates on thinking about mesh networking, security and future directions.

    http://www.eweek.com/article2/0,1759,1556082,00.asp

     

    Usability Alert from Original Mac pioneer

    Jef Raskin author of "The Humane Interface" is interviewed on the current state of the usability profession.

    http://socrates.berkeley.edu/%7Efrank/BerkeleyGroks_Raskin.htm

     

    Not So Fast...

    Apple's tagged by the Better Business Bureau to refrain from fastest computer marketing.

    http://news.com.com/2100-1042_3-5180251.html?tag=nefd_top

     

    Migrating to Linux

    IBM has published a 9 step article on developers migrating from Windows to Linux.

    http://www-106.ibm.com/developerworks/linux/library/l-roadmap.html

     

    Big Brands on NT4?

    Netcraft study finds large number of companies still using Windows NT4 for Web Servers despite the fact the Microsoft is planning to discontinue support at end of year.

    http://news.netcraft.com/archives/2004/03/23/windows_nt4_still_astonishingly_popular_with_big_brand_websites.html

     

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    Have your say

    Agree? Disagree? Insufficient data to judge? Email us at views@arctecgroup.net, we want to hear from you. We will publish your name or anonymize your response as requested.

     

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    Arctec Group News

     

    Arctec Group is planning a round-table forum session in the Twin Cities, but would like to solicit your feedback for agenda topics.  We realize there is continually a high number of vendor or consulting sponsored events, and would like to determine what you feel is missing from an architecture or strategic IT planning perspective, to insure a positive and worthwhile session.  Please email your thoughts to views@arctecgroup.net.

     

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    Copyright © 2004 Arctec Group, LLC All Rights Reserved


Copyright © 2004 Arctec Group, LLC All Rights Reserved