Development 2.0: Addressing the cost of IT

development 2.0: high costs!
In a previous post entitled “Development 2.0“, I suggested that future development will largely be defined by fully capitalizing on open source technologies (indeed, open source has proliferated in almost every vertical market existing today) and leveraging other people’s infrastructures (think Amazon, Google, GitHub, etc) for all aspects of the development life-cycle.

These two aspects address the number one frustration for most businesses — that is, the lack of speed IT provides. Thus, costs become a concern — IT takes forever and they cost a lot! The beauty of Development 2.0 is that it addresses both issues. Both open source and borrowed infrastructures attend to lowering costs; what’s more, they do enable teams to move faster because they can focus on the business at hand (as opposed to the minutia of software development).

Interestingly, cost is easy to quantify for IT: for most businesses that employ software developers, regardless of vertical or market size, R&D (and indeed everything generically dubbed as IT) is a cost center. While the applications IT departments build ultimately assist businesses in making money, the cost at which this process occurs is often quite high. In fact, a recent CFO magazine article indicated that

IT still represents a huge corporate expense, accounting for about half of all capital spending and exceeding $500 billion annually.

What’s more, the value obtained from the high cost of IT is often undervalued as another CFO magazine article pointed out:

Executives estimated that between 9.6 percent and 32 percent of their technology spending is wasted or not very effective.

Not to be outdone, the 2009 Standish report also reported an interesting metric regardless the success (or lack thereof) of software projects:

44% were challenged which are late, over budget, and/or with less than the required features and functions and 24% failed which are canceled prior to completion or delivered and never used.

Thus, not only is IT expensive (half of all capital spending!) but it appears to fail, more often than not, in delivering value! In many cases, software projects run over budget or over time because teams are

  • writing too much code
    • that is, teams waste time building things someone else has already built and then their left maintaining code that someone else could maintain at little to no cost
  • spending too much time and money on infrastructures
    • that is, many small to medium size businesses spend too much money (and therefore waste time) on infrastructure build out (both hardware and software assets) that otherwise could be borrowed from companies that are far superior at such tasks

Both of these activities; however, can be addressed via open source technologies and borrowing someone else’s infrastructure.

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