Category Archives: rants

When Will Organizations Learn That Complex Software Is Not Easy!

A recent article over on Procurement Leaders titled “software procurement blunder grounds vital military helicopters” has me fuming.

First of all, it contains the phrase “procurement blunder” when the blunder does not appear to be the fault of the Procurement department, but the fault of idiots higher up.

Secondly, it contains the statement that an organization should “cut costs by developing its own software“.

I guess I should step back a minute and summarize the article. The UK MoD (Ministry of Defense) purchased eight (8) Chinook Mk3 helicopters in 1995 from Boeing which were delivered in 2001 at a cost of £259 Million. As of 2007, they were still not deployable because they could not be flown in poor visibility or at low altitudes because they were missing key operational software. This software, which would only have cost £50 Million (which is only 2.5% of the purchase price of the eight helicopters), was not included in the purchase because the UK Treasury demanded the MoD cut costs by developing its own software.

This is just nuts in so many ways. For starters:

  • Over 90% of software projects fail to come in on time and on budget.
  • Complex software systems, especially operating systems, typically require thousands of man years to develop. Red Hat 7.1, which only has to operate a PC and not a complex military helicopter with dozens of systems and hundreds of controls, required about 8,000 man years of development effort.
  • Complex (operating) systems can only be built by senior developers, which, fully burdened (with salary, benefits, hardware, and software costs), will cost you about 200K / man year.
  • This says that 100 M (slightly more than £50) only buys you 5,000 man years.
  • Even if your programmers knew exactly what to do, it’s doubtful you could even match the market cost of an already developed system which is being amortized over a large group of buyers.
  • The only way the MoD could make the helicopters flyable was to spend untold millions stripping them down to Mk2a configurations, which also delayed their deployment for 2 or more additional years.

But, more importantly, you’re trying to save pounds by pinching pennies! That never works! It would have been much more logical to try and find ways to reduce the purchase price of the helicopters by 2.5%. For example, could the purchasers have worked with Boeing to help them execute more strategic sourcing projects to reduce Boeing’s cost in a savings-split? Could UK MoD manpower have been lent to Boeing? Since most purchasers believe in the old maxim that you can take 10% off of the cost of anything, how hard would it really have been to reduce costs by 2.5% to cover the software costs if Procurement was allowed to be creative instead of having to deal with idiocy pushed down from the top?

Are Powerful CEOs the New Illuminati? Are Their CFOs the New Initiates?

Conspiracy theorists have long maintained that a secret society composed of a select few, modern Illuminati, are controlling world affairs through government and corporations. It looks like they were right. As referenced in this recent article on Inside Science, a recent “study says world’s stocks [are] controlled by select few”, as per an analysis of the tangled yarn that comprised the 2007 financial markets in 48 countries which consisted of 24,877 stocks and 106,141 shareholding entities.

More specifically, the study found that the Capital Group Companies, Fidelity Management & Research, Barclays PLC , Franklin Resources, AXA, JPMorgan Chase & Co., Dimensional Fund Advisors, Merrill Lynch & Co., Wellington Management Co., and UBS are the top-ten global power holders with major stakes in 36 of the 48 countries studied. In other words, the study found that a very small number of companies in the US financial sector have significant control over 75% of global markets! And since all of these companies are ultimately controlled by a CEO whose power far exceeds that of the monarchs of old, if that’s not the definition of Illuminati, I don’t know what is!

When the Market Recovers, Will You Have Logistics Capacity?

Share This on Linked In

A recent article in Industry Week, which noted that “logistics [is] on a bumpy road to recovery”, had a scary statistic: 7% of the available capacity on US highways was eliminated last year as more than 3,000 trucking companies went out of business. And many more have went belly up since the year began. While the stats are not yet known, I’d estimate that over 10% of 2007 capacity has disappeared. When you consider that the capacity was almost fully utilized, this is not a good thing, as rail only gets you to a rail yard, not to your DC or the store.

And while you should definitely be using more rail, as this could significantly lower your (domestic) fuel usage and shipping costs, you still need the trucks for the “last mile”. Thus, you should be analyzing the state of your carriers now, their capacities, and locking in guarantees before they become scarce when the economy turns around again. Otherwise, you might see a large spike in your logistics costs again which would hurt your chances of a quick recovery.

What is a Successful ERP Implementation?

Share This on Linked In

A recent CIO blog post asked “what does a “successful” ERP implementation actually mean”? This puzzled me, because the answer is easy:

One that is never started.

As the author notes, there’s just no way the majority of these bloated projects come in on time, on budget and without one or two people losing their jobs … because all big bang projects do is blow up.

Not that they can’t be successful, they can, and a handful have been, but, in reality, with the complication inherent in today’s business and the complication inherent in today’s systems, they usually aren’t … no matter how well contingencies have been planned for, how reasonable the expectations are, or how good communications are from start to finish. After thirty years, these systems are still so complicated that they are still beyond the comprehension of the average company.

That’s why you should approach your enterprise software needs one step at a time, one core system at a time, and one standard at a time. Define your basic architecture and your basic interoperability model and then select systems that fit into that model. Implement one system to solve one set of problems at a time, insuring one is working before starting on the next, and you’ll greatly reduce the risk of your project being a catastrophic failure.

This isn’t to say that you can’t standardize on one ERP platform … a few companies have found success with mostly end-to-end SAP and mostly end-to-end Oracle, but that if you take the approach, you do it one module at a time. If your integrator says you have to do it all at once, find a new integrator. If your provider says you have to implement the entire system at once, find a new provider. It’s literally as simple as that because, when you get right down to it, it’s your money … let it talk.  After all, as Vinnie astutely points out, if you really want to succeed, don’t upgrade, escape.

Supply Management is NOT a Joke

Share This on Linked In

Over the past couple of weeks, two attempts at humor have emerged in this space that, quite frankly, scare me. One is Ariba’s Spendman, covered recently on Spend Matters (It’s a Bird, It’s a Plane, It’s Spendman), and the other is Kinaxis’ Entertainment Center with Married to the Job, Sensei Bob, and the Late Late Supply Chain Show.

Whether you call it Purchasing, Procurement, Spend Management, or Supply Chain Management; Supply Management, the one area that is guaranteed to help any business in these troubled times, has been struggling to be taken seriously for over a decade. And, by and large, it’s still not at the table in most companies. And, as far as I am concerned, this is not a laughing matter … but yet we have a late late show I couldn’t watch more than 59 seconds of, a set of Second City skits that left me scratching my head wondering just what I was watching, and a comic book character?

You know what this says to me? And more importantly, what I think it’s going to say to the executives that still don’t get supply management? It says supply management is nothing but entertainment for low-level tactical purchasers (the late late supply chain show), that we’re nothing but back tactical office desk jockeys (married to the job), and that we’re not grounded in the real world (Spendman). After all, talk shows talk about irrelevant fodder, comedy skits make fun of that which is silly to begin with, and comics are fiction read only by losers who live in their parents’ basements while dressing up in costumes and speaking made-up languages. And while these generalized statements may not be entirely true, you have to admit they are the stereotypes … and I can’t see how supply management can benefit in any way from these stereotypes, with nothing but negative connotations, that will be applied by anyone who doesn’t get Supply Management and stumbles on the Kinaxis entertainment center or Spendman.

Maybe I’m overreacting, but what if I’m not the only one?