Build vs buy (OT??)

Posted by agent_008_nl on 12-Sep-2014 06:59

http://www.informationweek.com/strategic-cio/executive-insights-and-innovation/build-vs-buy-a-dangerous-lie/d/d-id/1113643?page_number=1

I was thinking about the bankruptcy of a dutch company (OAD, http://www.nltimes.nl/2013/09/26/oad-bankrupt/), where the wrong answer on the build-vs-buy question has played an important role if I understood the stories right (available in dutch only: http://hanshoek.c3log.nl/ict-lessen-van-oad/ and http://managementartikelen.nl/wp-content/uploads/FD-04-2014-E-book-Ondergang-en-opkomst-van-familiebedrijf-OAD.pdf). The off-the-shelf solution bought was built with progress products.
    I know of at least one organisation at the moment where such a wrong answer could result in progress based custom applications being flushed down the toilet in favour of an off-the-shelf non-progress solution and a financial and human disaster. The article at the top provides an intelligent and original view on the threats of buy-decisions.

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Posted by Paul Koufalis on 12-Sep-2014 09:12

In my experience the fault lies within the company: because their application was written in 1993 they think that it cannot be modernized without huge costs and difficulties. They don't realize that the off-the-shelf solution was also written in 1993 and it just has a prettier lipstick-on-a-pig UI.  I have seen this time and time again.

The good news is that first the company announces "We are phasing out the Progress application and migrating to SAP/Oracle Financials/Bla Bla...". then five years later, we plan the Progress upgrade because the purchased application can't do half the stuff their business needs.

Posted by Thomas Mercer-Hursh on 12-Sep-2014 09:31

Quite some years back I had an interesting experience with one of my customers.  They were running my ERP application and I had downsized to a one person company so there was a period where I was busy with some other projects and wasn't perhaps as responsive as they wished I would be.  So, without telling me, the CFO scouted around for another package and picked one that was considered the top of the line for the publishing industry (they were a publisher).  I got informed after the contract was signed and deposits paid and they contracted me to assist with the data migration.  Well, as we attempted to go through the mapping from my data structure to theirs, it became apparent that moving would mean the loss of massive amounts of data because my system was far richer than theirs.  Eventually this was so bad that they cancelled the contract at substantial loss.

They still had the same concern, so they contracted with me to build a requirements document so that they could properly evaluate another system before signing the contract.  Not everything in the requirements document was in my system since it included the improvements which they were looking for, but my software did a good 95% of what was in the document.   They sent that around and asked for bids.  Not a single publishing package was willing to respond.  They only responses at all were from major ERP solutions like Oracle Financials and PeopleSoft and those were very tentative.   Oracle was the only one who pursued it at all and they came up with a rough estimate of $2M in modifications on top of the expensive license cost.

So, we had a little negotiation and they and I committed to a body of work and a rough time schedule and we went happily off into the future until they were bought by Wiley, who, of course, had their own software.  Again I was contracted to do the data migration, but only for the royalty contracts piece since the rest was irrelevant.   Again there was substantial loss of data and capability, but they did it anyway.

Posted by agent_008_nl on 14-Sep-2014 12:28

Paul,

Consulting companies (yes, companies hiring out *progress* specialists) have a responsiblity also. It is all too easy to squeeze out many millions of euro's / dollars out of a company in trouble with dummy managers and moreover provide your own consultants with a nice testing ground to improve their competences.

-- 
Kind regards,

Stefan Houtzager

Houtzager ICT consultancy & development

www.linkedin.com/in/stefanhoutzager

Posted by Paul Koufalis on 14-Sep-2014 14:16

Like in any business, there are ethical professionals and unethical vultures and a big group in between.  And I have yet to find a customer that is willing to give me "many millions of euro's/dollars".  My technical skills are good but my sales and marketing skills could evidently use some improvement!

All joking aside, modernizing an existing, highly-customized app is often more economical than doing a rip-and-replace.  You are correct: the company must find an ethical and professional consulting partner if they don't have the manpower and/or expertise in house.

How does that expression go?  Fast - good - cheap.  Pick two.

Posted by agent_008_nl on 15-Sep-2014 03:13

> You are correct: the company must find an ethical and professional consulting partner if they don't have the

> manpower and/or expertise in house.

Of course the company has that responsibility, but when you as consulting partner get the smell in your nose that they do not take it you can advise them in that respect too, instead of handy making use of the circumstances for own profit.

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