re: Software Patches Eat Government IT's Lunch
I find it interesting when people complain that they are losing
money as a result of applying software fixes.
The simple answer for organizations that are losing money applying
software fixes is for the organizations to discontinue using the
software. Then they would they recover those "losses" -- right?
But, of course, they will nearly always "lose" even more money if
they discontinue using the software. Adoption of nearly all
business software products results in cost reduction of
actions that can already be performed. There is often very quick
adoption of new products that provide significant cost reductions
because the people that purchase the products can get their money
back in less than a year and then go on to get significant cost
reductions year over year. However, people still gripe because
they don't save even more because of product defects.
For example, Larry Ellison of Oracle said that Oracle saved a Billion dollars a year when it
adopted Internet technology products for HR and other internal processes. -- I believe
it. Now Oracle could have saved even more that a Billion dollars
if there were no product defects. Lets suppose Oracle saved
$1,000,000,000 but if there were no product defects they would have
saved $1,010,000,000. Now Larry could say that Oracle lost
$10,000,000 by adoption of Internet technology products --- and it
would be true using the logic of the per "Software Patches Eat
Government IT's Lunch" story.
Software, unlike almost all other products, is peculiar because
customers pay to get fixes to defects in delivered products. Why
is this? Why do customers purchase such products and then have to
pay to have design defects repaired. Lets consider to companies
building the same type of software products.
Lets say Company A gets the product out in 2010 where it is
purchased by the Bank of America. Lets stay that Company A's
product has many software defects costing BoA $10,000,000 during
the next two years. Lets say Bank of America, saves
$500,000,000 per year because of the adoption.
Lets say Company B gets the product out in 2012 at the same
price as Company A and because of the extra two years of
testing, software defects cost $0 per year and the Bank of
America starts saving $500,000,000 per year at that point.
What's the better deal for the Bank of America?
Did Bank of America lose $10,000,000 by adopting Company A's
product or did it lose $990,000,000 by waiting to adopt Company
B's bug free product?
Of course there are tradeoffs here. If the products have too many
bugs then they become unfit for use. But competition typically
sorts this out.
Anyway, the bottom line here is that when you hear about
organizations losing money because of the cost of applying fixes for
software defects, its probably not the case that the organization
lost money by adopting the use of that software. They just want to save even more -- and that is good. However, sometimes it's
good to remind people to consider all the costs and benefits.