Data Center (Cloud) Cost Efficiency

A few months ago I mentioned James Hamilton’s comments on the micro-server trend. Today I came across a talk he gave at MIX10 in which he presented excellent real-world large-scale data, with insightful analysis, about the cost efficiency of data centers. (Here is a direct MP4 download, suitable for viewing across more platforms.)

I had an intuitive feel for many of his conclusions already, and had numbers to back that up on a small scale (as a customer of cloud services, and provider of SaaS services, and employer of people who operate systems). But I am very pleased whenever an opportunity comes along to replace intuition with data.

I won’t attempt to repeat his ideas here. I will simply recommend that you watch this (and other similar analyses) and get a decent understanding, before purchasing or deploying any in-house, self-hosted, or self-managed servers. The latter still makes sense in some situations, but in 2010 the cloud is the default right answer.

A number of the ideas he presents are iconoclastic; some popular trends, especially in enterprise data centers, turn out to be misguided.

We’re hiring a NON-developer

Over at Oasis Digital, we are in the (job) market for our first non-developer, non-project-manager, non-service-delivery-focussed full-time team member. The job post is on the Oasis Digital site; I thought I’d write about a bit more about the story here.

Part of the challenge of running a software development consulting firm, is the tension between:

1) Focus on Customers You Have Now

Some firms are so service-delivery centric (#1 above), that they don’t bother to address the rest of the world, i.e. all of the not-customers-yet. Small consulting firms are especially vulnerable to this, and as a result they stay small.

Historically, Oasis Digital started in this category, with long-term projects, satisfied customers, and slow/organic growth. The shape of our organization reflects this: everyone, including me, works mostly on creating software for customers.

2) Focus on Customers You Want to Have Later

Some other software firms are highly marketing-driven, to the extent that their service delivery value proposition (in terms of design, features, and quality per customer dollar spent) suffers. Large technical service firms are especially vulnerable to this. Anyone who has been around the block a few times, has experienced the unique joy of a very large sum spent with a very large vendor to deliver sufficient, but disproportionately expensive, results.

Turning Up the Heat

Our goal and challenge now, is add a bit of focus on future customers (which is to say, marketing, community participation, etc.), without losing our service delivery mojo. To move things in that direction, we need at least one person who is not occupied by service delivery… hence our upcoming hire.

We will also quite likely start another software product or SaaS business along the way. (I’ve been there before, of course, and did plenty of hiring and business development work along the way.)

Some Things Won’t Change

Since inception, our sales process has been decidedly non-traditonal:

  • We encourage potential customers to meet their needs with off-the-shelf software, not custom software, if possible.
  • We don’t have commissioned salespeople. Nor commissioned pretend-they-aren’t-salespeople.
  • Most of our team is, and will always be, all about delivering great results for our customers.

I’d love to receive feedback on this, from those of you with experience in this particular transition. You know how to reach me.

Update: We’ve filled the need for that job post, with a combination of a few people, rather than a single jack-of-all-trades as I had planned.

Why Choose Custom Software?

To meet the software needs of your business, there are two main paths:

  1. Buy software “off the shelf”
  2. Build custom software (in-house, or with a development firm)

In most cases, off-the-shelf makes the most sense, and it should be your default choice:

  • Acquiring and deploying off-the-shelf software is usually faster than getting custom software developed. Even complex installation and configuration it typically faster than developing new software.
  • Off-the-shelf software is generally cheaper than developing your own. The development cost of an off-the-shelf package is distributed among multiple firms, possibly many firms worldwide. These many customers more than offset the extra cost of mass production and distribution. Comparatively, with custom software your business alone bears most of the costs.
  • Off-the-shelf software typically has years of testing and years of production use, as well as feedback and improvement, giving confidence that it actually works.
  • Off-the-shelf software may include a money-back guarantee in case it does not meet your needs.

For all these reasons, the option of designing custom software bears the burden of proof in your decision-making process.

There are good reasons, though, to consider custom development, especially in mid-sized or large companies. Under the right circumstances, these advantages can make the decision to develop software the best choice.

 

Read the rest on the Oasis Digital blog.

 

New Focus, New Tagline

I registered and launched kylecordes.com 12 years ago, in March 1998. At the time I was working inside a manufacturing company personally creating and expanding an in-house ERP/CRM system. My intentions and expertise were almost entirely technical, and I named the web site “Kyle Cordes’s Software Site”, which I carried forward as the subtitle/tagline when I converted it to a blog a few years later.

Since then, my own focus has expanded, and is as much on the business of software and related technology as on the technology itself, along with occasional posts about neither of those things. So today, I’ve changed the tagline to “Software, Business, and Life”.

If you have a suggestion for a catchier tagline, I’m all ears.

Mobile Workforce Management, a Five Year SaaS Mission Completed

Here is the story of a substantial chunk of my professional life over the last five years. I didn’t tell this story in real time (for various good reasons), though I have mentioned bits of it in various talks.

In 2004, I co-founded a vertical market Software as a Service firm, Mobile Workforce Management (MWM). MWM serves the underground utility locating industry with a Software-as-a-Service offering, TicketRx. Most people interact with this industry only with an occasional “call before you dig”, and think of it as just a phone number. However, there is a lot more to that industry than a phone number; there are numerous companies involved, each interacting with the others to complete the work. It is a vertical market niche with specific software needs, which our product met.

I personally wrote and administrated the first version of the TicketRx software and the first few servers, and my cofounder personally performed analysis, support, documentation, operations, and mountains of other work. We then incrementally hired a team to expand our capacity (and make ourselves replaceable), building an organization to serve its customers. Our software startup became an operating business with a life of its own.

Fast forward… five years of incremental and accelerating growth…

In 2009, the opportunity presented itself to sell MWM, and we did so. MWM is still there, operating fine without me. The press release about the sale is online and is also reproduced below. It is amusing to see how PR-speak invaded, labeling TicketRx as “custom” even though its whole essence was to not be custom, but rather off-the-shelf and highly configurable. Perhaps it is custom in the very broad sense of being industry-specific.

As is common in deals like this, the “terms of the transactions were not disclosed”, along with many other interesting bits. Still, I have a great number of lessons-learned to share in future posts and talks; and as of early 2010, there is extensive information about the product itself on the company’s web site, http://mwmsolutions.com/

Where does that leave me?

For some reason, the notion of having two companies then selling one, has been surprisingly hard to communicate. I still own Oasis Digital Solutions Inc., a consulting / custom software development firm, and work more intensely than ever with its customers and developers. Oasis Digital is growing up rapidly, with marketing efforts and ever-increasing process and organizational maturity.

Growing a product/SaaS business was a great experience, and one I hope to repeat. I’m actively on the lookout for another non-consulting software business to launch, when the time and opportunity are right.


St. Louis-based MWM sold to Consolidated Utility Services Inc.

Custom software product TicketRx, provides cost effective job tracking for utility locating company

Jan. 19, 2010: ST. LOUIS, Mo. – St. Louis-based Mobile Workforce Management has announced the successful sale of its company assets, including its commercial software as a service product, TicketRx, to Consolidated Utility Services Inc., an underground utilities locator company based in Omaha, Nebraska.

“With TicketRx, we created a customizable system to provide field service staff remote access and management tools for receiving, routing and tracking tickets and job assignments in real time,” said Kyle Cordes, a principal of Mobile Workforce Management (MWM) and owner of local consulting firm Oasis Digital. “We started TicketRx in 2004, and experienced great success with over 1,000 users and a growth rate of 25% per year.”

The sale of TicketRx to Consolidated will allow the company to integrate the system into their full spectrum of services that serve to protect utility companies’ underground infrastructure. In addition to ticket tracking, Consolidated offers clients systems for locating utilities, performing field audits and managing claims.

“Creating a comprehensive software solution such as TicketRx that fulfills a complex set of needs and watching it operate successfully is a very rewarding experience,” said Cordes. “I am confident the custom software solution we developed will make Consolidated’s business stronger.”

TicketRx processes one-call tickets from ‘call before you dig’ call centers or utility companies and then routes the work to the appropriate field worker. Technicians have immediate access to the information they need, which improves on-time performance. And managers have easy-to-use tools for scheduling, balancing work loads and providing emergency notifications. The system tracks all activity on the ticket, which can be used to create invoices and reports.

TicketRx is a Software as a Service (SaaS) model, a growing trend in which companies are adopting easy-to-use services that can be integrated efficiently, with minimal risk and at a cost advantage. With SaaS companies can have the service they need without the responsibility for their own internal servers, data centers or related IT staff, saving them time and money. According to industry analyst firm Gartner by 2010, 30 percent of all new software will be delivered as a service

Since the sale of MWM, Cordes will focus his energies on Oasis Digital. “The sale of MWM and TicketRx allows us to concentrate our efforts first on our consulting clients here in St. Louis and elsewhere, then later on our next SaaS opportunity,” Cordes said.

About Oasis Digital Solutions Inc.

St. Louis-based Oasis Digital develops custom software for workflow management, application integration, business process automation, and handheld devices for companies nationwide. Oasis Digital can produce a whole project or subsystem depending on the needs of the client, using a variety of computer languages and technologies. Fore more information, visit www.oasisdigital.com.

About TicketRx

TicketRx is a product of Mobile Workforce Management, LLC, and is a software-as-a-service program for the underground utility locating industry that can manage locating tickets from one-call centers or directly from the utility companies. TicketRx offers a unique combination of a broad feature set, fast setup and quick learning time. For more information, visit www.mwmsolutions.com/ticketrx.

SaaS: The Business Model – Slides, Audio, Transcript

On Feb. 27 at St. Louis Innovation Camp 2010, I gave a talk on the SaaS business model. If you missed it, you might be interested in: