Doing ROI for agile, DevOps, et. al. is difficult

I wrote up a rant-y style summary of thinking about ROI when it comes to planning out Agile, DevOps, cloud native, and otherwise “new ways of doing things in IT” schemes.

A little excerpt:

Doing “agile,” however, isn’t like dropping in a new, faster and cheaper component into your engine. Many people I encounter in conference rooms think about software development like those scenes from 80s submarine movies. Inevitably, in a submarine movie, something breaks and the officer team has to swipe all the tea cups off the officer’s mess table and unfurl a giant schematic. Looking over the dark blue curls of a thick Eastern European cigarette, the head engineer gestures with his hand, then slams a grimy finger onto the schematics and says “vee must replace the manifold reducer in the reactor.”

Solving your digital transformation problems is not like swapping “agile” into the reactor. It’s not a component based improvement like virtualization was. Instead, you’re looking at process change (or “culture,” as the DevOps people like to say), a “thought technology.” I think at best what you can do is try to calculate the before and after savings that the new process will bring. Usually this is trackable in things like time spent, tickets opened, number of staff needed, etc. You’re focusing on removing costs, not making money. As my friend Ed put it when we discussed how to talk about DevOps with the finance department:

In other words, if I’m going to build a continuous integration platform, I would imagine you could build out a good scaffolding for that and call it three or four months. In the process of doing that, I should be requiring less help desk tickets get created so my overtime for my support staff should be going down. If I’m virtualizing the servers, I’ll be using less server space and hard drive space, and therefore that should compress down. I should be able to point to cost being stripped out on the back end and say this is maybe not 100% directly related to this process, but it’s at least correlated with it.
In this instance, it’s difficult to prove that you’ll achieve good ROI ahead of time, but you can at least try to predict changes informed by the savings other people have had. And, once again, you’re left to making a leap of faith that qualitative anecdotes from other people will apply to you.

Read the rest over in my Medium feed.

“No one wants to eat a finger-pie.” – Software Defined Talk #70

This week we discuss Rackspace going private and the OpenStack cloud scenarios that could have been. We also cover Matt Ray’s first trip to New Zealand where, sadly, he finds no Power Ranger monuments. Also, a little bi-modal flavor for ya.

Check out the full show notes (https://cote.io/sdt70) for links to the recommendations, conferences, and tech news items we didn’t get to cover.

Listen above, subscribe to the feed (or iTunes), or download the MP3 directly.

With Brandon Whichard, Matt Ray, and Coté.

SPONSOR

Show notes

RAX goes private for $4.3bn

OpenStack dead, again.

  • “Tough times ahead”.
  • “There was a time when it was hard to read an article about OpenStack without hearing about ‘pets vs. cattle,’ and OpenStack was designed to herd cattle”
  • “It has itself become a big, complex pet, which is why Mirantis and others can make a living providing services, software and training.”
  • What could have happened: (1.) “we can beat AWS,” or, (2.) “containers, shoulda thought of that.”

Innovation is hard, esp. business-wise

  • How could you compete with AWS?
  • Word vs. Google Docs vs. Office 365.
  • Uber has spent at least $4bn?

BONUS LINKS! Not Covered in show

AWS Sentinel is Coming

  • Skunkworks-ish project from AWS for managed services. Potentially lots of partner conflict
  • “MSPs need to work with customers to convert their infrastructure to Platform-as-a-Service using microservices architecture,” said one AWS partner. “They also need to bring DevOps into the heart of the organization. Unfortunately, most MSPs don’t have the developers that truly understand this.”
  • “Few AWS Partners Are Really Surprised By Sentinel’s Emergence“

MariaDB switches away from open source license

Hashicorp Shuts Down Otto

Microsoft Open Sources Powershell

Recommendations

  • Brandon: first US college football game in Australia
  • Matt: Rugby, help me learn it.
  • Coté: BCG on two speed IT; Wizard of Oz series.

Rackspace pivots to private

Brenon at 451 points out that Rackspace throws off a good amount of cash, “$674m of EBITDA over the past year,” and concludes:

While we could imagine that focus on customer service as competitive differentiator might set up some tension under PE ownership (people are expensive and tend not to scale very well), Rackspace has the advantage of having built that into a profitable business. In short, Rackspace is just the sort of business that should fit comfortably in a PE portfolio.

See also Rachel’s analysis over at RedMonk.

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Source: Rackspace pivots to private

Why do you have to burn $4bn to add mobile apps to taxis?

In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the U.S., those people said. That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.

Meanwhile, revenue:

Bookings grew tremendously from the first quarter of this year to the second, from above $3.8 billion to more than $5 billion. Net revenue, under generally accepted accounting principles, grew about 18 percent, from about $960 million in the first quarter to about $1.1 billion in the second.

It’s expensive to start a global, meat-space business, even if you’re “assetless”:

Uber, which is seven years old, has lost at least $4 billion in the history of the company.

I find the continuous usage of Uber as an example of “the way forward” in business unhelpful. Not because it’s not an interesting business, but because without these kinds of numbers in context, you think it’s easy. If you’re prepared to burn through $4bn before profit, sure thing!

The advantage established businesses should have is less spending to build a market: they just need to do better serving their existing customer base at first, not spend all that money to start from zero. What I find devilishly fascinating is why it’s so hard for those large organizations to take advantage of the assets they already have and why, possibly, it’s easier just to start from scratch, as Uber has been doing with that $4bn.

Source: Uber Loses at Least $1.2 Billion in First Half of 2016

Pinterest Instapaper

I’ll finally be a heavy Pinterest user:

People use Pinterest and Instapaper for similar reasons. The similarity is almost too close for the deal to make sense. Pinterest started out as a way for people to collect content from around the web for themselves and others to check out later. At first, people were mainly saving images, but they’ve also started saving articles, to the point that Pinterest considers that “a core use case.” But saving articles is the same reason people use Instapaper — its “core use case,” if you will. So why would Pinterest buy a company whose product largely duplicates its own?

Because Instapaper stores the actual content, removing the need for people to leave its app to view it. And because eight-year-old Instapaper brings with it a bunch of insight into the articles that people save and read, which translates into data six-year-old Pinterest can use to get a better idea of what content it should recommend to its audience. That data could be combined with the data Pinterest already has on what content people like to post to and view on its service. And it could give Pinterest a way to try to rival Facebook as a popular place people go to find things to check out, be it wardrobe ideas, tattoo designs, how-to videos or news articles.

Source: How buying Instapaper could help Pinterest become a media portal like Facebook