Every once in a while I go geek. I don’t apologize for it. It’s been a fixpoint in my life since I was old enough to crawl under the coffee table and push the big buttons on our bulbous and bright red 70s TV set.
The TV finally broke (NOT my fault), but the habit didn’t.
This time around it happened with Excel. I’m not the biggest Excel fan out there, but I needed to make a TCO calculation and basically wanted Excel to do two things for me:
- Distribute project costs over multiple years based on project-timeline.
- Distribute operational costs over multiple years based on how many years were between each payment.
Geeked out yet?
Lo and behold, all I could find online was that this was impossible. You could do nifty macros, you could color every other row, you could sum every Nth row, but if you had an invoice coming in every 3 years and wanted a generic way to get yearly budgets N years in the future, you were basically s… out of luck.
So I did this:
For distributing project costs over n years:
IF(AND(YEAR($startdate)=$currentyear;YEAR($enddate)=$currentyear); $projectcost; IF(AND(YEAR($startdate)=$currentyear;YEAR($enddate)>$currentyear); $projectcost/($enddate-$startdate)* (DATE($currentyear+1;1;1)-$startdate); IF(AND(YEAR($startdate)<$currentyear;YEAR($enddate)>$currentyear); $projectcost/($enddate-$startdate)*365; IF(YEAR($enddate)=$currentyear; $projectcost/($enddate-$startdate)* ($enddate-DATE($currentyear;1;1));0))))
I break the project cost down to a cost-per-day , and then distribute it over the years based on how many project days there are in each year.
The first IF is to determine if the start and end-date is within the same year, and the next three are to differentiate the first year from a “middle” year and the last year as each of these calculations are slightly different. Pretty straightforward.
For projecting operational costs with n years between them
IF($recurrence<>0; ROUNDDOWN((-(MOD(($currentyear-YEAR($startdate));$recurrence)) +$recurrence)/$recurrence;0)*$cost;)
This one is a little more complex and was the one I couldn’t find anywhere. The first half figures out if the time from the startyear to currentyear divided by the recurrence is a whole number (i.e. that it’s time to pay). If it is, it creates a 1, and then I just multiply that with the cost.
Now I don’t pretend to be an Excel wizard in any sense of the word, so don’t ask me technicalities about why I used one function instead of another. All I had was some very helpful colleagues who were excellent guides into Excel-syntax and once I understood most of how it worked, the rest sort of came on its own .
So if you can use it, feel free to share and use it as much as you like. I’ve attached an example of the whole thing working. Just play around with the input and try adding as many years as you like to see how it works.
At one end normal people, like you and me, are buying increasing numbers of personal gadgets, bringing them to work, and using them as a central part of our working life. Along with our Gmail, Facebook, and other social services, they are an interface to an online presence that is no longer just a fun time-waster, but an essential part of our social- and knowledge- nervous system.
With our online gadgets we are legion, without them we are merely individuals, and the IT department that used to run your PC for you are finding themselves with an increasing challenge of figuring out, whether to just let loose and allow everybody to bring their own devices, or to implement some heavy-handed Device Management and not allow any data outside their control.
At the other end of the spectrum, the huge mainframes and IT infrastructure that used to power companies are slowly but surely being challenged too. Running IT is fundamentally ruled by the same volume dynamics that we’ve known since the industrial revolution: The bigger the data-center and the more people you service, the better the price-performance.
It used to be that every company, no matter how small, had an IT guy responsible for running servers. Whether it was just one server under a desk or a few in a closet, you needed something people could log into, share files, and work from.
Not so today. Today, smaller companies are increasingly doing what we as individuals have been doing for years: buying all of these services online. Dropbox, Amazon S3, Office 365, etc. are all services where you can get a better service for much lesser cost simply because it is much cheaper to run things like that if you’re doing it for millions of people instead for 5-6 people in a small office.
And as this phenomenon, normally called Cloud computing, is maturing and becoming more and more pervasive, it is moving up in the world. It started with the simpler services, like e-mail and online collaboration, causing even Fortune100 companies and governments to start moving these services into the cloud to get savings, but now even old complex mainframe vendors are starting to offer their systems through the Cloud too because they can do it at lesser cost than even major companies can do on their own.
So where does that leave your Dad’s IT department?
The main job of an IT department used to be running the infrastructure, the servers, and the PCs that everybody uses, but the infrastructure is in the cloud, the servers are soon to follow, and you’ve brought your own device.
In other words, it is foreseeable that IT departments will become merely procurement-experts, buying the services that the company needs without running anything, and that the task of ensuring security will be managed through corporate policies like: “make sure your device is backed up in the corporate cloud, can be remotely wiped, and is encrypted” etc.
So yes, unless your Dad works in a company that is running IT for others, it is in fact likely that your Smartphone is killing off his job, his department, and the entire role that IT departments used to have in companies.
But as with all changes driven by cultural and social progress, it is not something to feel guilty or sad about. It just is, and that is as it should be.
I must admit that until Matt Jacobson of Facebook stopped by my workplace for a marketing session yesterday and spent significant time debunking peoples concerns about storing their stuff online, I’d mostly focused on the corporate, legal, and commercial issues and not concerned myself too much with the fact that the majority of my personal data is living a good and active life online.
Maybe it’s because I’m a child of the Microsoft hegemony, and used to the fact that in order for all of us to benefit from a technology, somebody has to define the ground that the rest of us builds upon. Sure, that kind of power almost begs for them to overstep, misuse it at times, and reap as many commercial benefits as they can in the process, but ultimately they’re accountable to all of us and – as happened with Linux and ten years of MS court-cases – the world will find away around it when they overplay their hand.
For Facebook, Google+, Flickr, LinkedIn, Apple, Amazon, and all the others vying for a piece of our personal and social data pie, and no matter what Matt says, it’s therefore necessary to balance value against exploitation. If companies want to stay in the game, they have to provide you value higher than the downside of allowing them to give commercial stakeholders access to, not only your personal data and family pictures, but also to behavioural and social data that will ultimately give them more awareness of who you are, and what you are likely to do, than you probably know yourself.
What most of the more agressively expansionist players online – sorry for not calling them benign idealists – have realized is of course that, unlike traditional business models, in online business the consumer is the product, companies are the consumers, and volume the currency. So when you see them actively trying to minimize their commercial benefits, it’s not because they believe in a rosy future of technology-driven freedom for all. It’s simply to drive more users, more data, and more volume.
When Google therefore provides services for free, open up their software for developers, sets advertising costs at market standard even though they provide much more value per dollar, and says they’ll “do no evil”; When Facebook launches the Open Compute project, gives developers free access to their APIs, and provides a world-class service free of charge or in-your-face advertising; and when any company that wants to be something online is providing services, software, and even content for free, it’s not because their blind idealists, but because the race is on to take over where Microsoft left off and become a part of the next big OS in the cloud where power is not in the code you maintain but in the data you hold.
More traditionalist companies like Apple, Amazon, and Barnes & Noble, are stuck struggling to make old-fashioned business models – that require content-control all the way down to the device in your pocket and charging a percentage all the way – work in the cloud, while cloud companies like Google lean back and simply utilize their user and data volume to build the same services virtually for free once a standard has been fleshed out.
This is why Apple for all intends and purposes invented the modern Smartphone, Amazon invented one-click buying, and both of them spent years grinding out the details of how to legally distribute content online, while Google just leaned back, waited until they were done, and then threw Android, Google Wallet, Google Music, and free books into the mix. It’s not because Google is a slow copycat that don’t want to make money, they’re just in a data-volume business where they can make money with a fraction of the risk and effort, and Facebook is positioning itself to be able to do exactly the same.
So you shouldn’t be too concerned about sharing your life with the Facebooks, LinkedIns, and Googles of the world. Trust me, they are very aware that having your trust, getting you to use their services and giving them access to your personal data-stream is the cornerstone of their business, so they’ll do anything in their power not to jeopardize that relationship.
This isn’t to say that there wont be cases of misuse, oversteps of privacy, commercial exploitation, and all the other nasty words that the last century has made us grown-ups allergic to. But as the young people of today – who are gladly moving their entire lives to the cloud without a concern in the world – are showing us, it’s really not a question of exploitation, but of a new type of business in which the consumers may not pay or have direct control over their data, but where the market mechanisms are already in place to ensure that any company overstepping your boundaries will see the impact on their bottom line.
- Nicholas Carr – The Big Switch
- The Register – Cloud startup’s business model defies laws of physics
- Joel York – On The Cloud Customer is King
- Fujitsu – Personal Data in the Cloud: A global survey of consumer attitudes
- Sid Yadav – Privacy on social networks a concern for old, not young
With the release of Facebook timeline and the privacy controversy, here’s a few more links you might be interested in:
Now, those who know me, know that I’m one of those no-financial-commitments-whatsoever bastards that go through gadgets like most people go through change of underwear. I’ll buy something – seemingly on the spur of the moment – play around with it for about two weeks of geek-bliss, and then suddenly it’ll be off to that mysterious graveyard of single socks, pens, lighters, and decade-long tea-parties of the soul.
In my defence I have to say that I’m not a tech-blog freak and usually don’t drool over GhZ, passive touchscreens, SSDs, or the newest fourth-dimension graphic chip. I pride myself at being slightly more practical than that. So unlike other epi-centres of homeless hardware, I actually start by figuring out what I need and only then start searching for it to see if somebody have had the same idea and gone through the trouble of creating it.
Whatever the excuse though, it allows me first-row view to both some pretty awesome inventions – along with some gaping holes in the worldwide gadget portfolio – so without further ado, here are my two favorite buys this year:
I don’t know how Jambox did this, but they managed to cram awesome sound, dead-simple set-up, AND 9 hrs of battery into one small and very portable package. It’s simply awesome. Only feature I haven’t gotten to work so well so far is the conference phone and the online updates and apps for it, but to be fair I haven’t tried that hard yet since I’m so satisfied with the basic functionality.
Most of the reviews says it all. It doesn’t do a lot, but what it does it does exceedingly well and without me having to browse through a gazillion manuals to figure it out. I’ve only had it for two months and gone through 11 books, but the very responsive touch-display, the 6″ screen that actually fits a paperback (unlike my old Bokeen Opus), and the four different ways to flip pages (actually a problem on most ebook readers because you get sore arms) has made it a joy to use.
Now I wouldn’t be a gadget freak if I didn’t also have a slight Apple-fetish. And to be totally honest I do.
But maybe I’m “just not getting” the Steve-and-Ives awesomeness, because to me Lion is still a W7-with-less-features and iOS a locked-down version of something useful, so besides having been through almost all Apple products at one time or another (I never tried the TimeCapsule), I still find myself bootcamping all my Macs and unlocking all my iOS devices to give them the features that should have been there in the first place.
I acknowledge that maybe my brain is wired wrong or something. I did force-feed myself AppleOS on my iMac for six months to see if I could “get it”, and still found myself bootcamping back – doing the obligatory two-week iTunes-migration-dance that never works – and you therefore wont find me doing major investments in an AirPlay stereo speakers until MS, Google, Creative, and the others have made a go at it too.
Now speaking of speakers (hah!), let me finish by sharing the current top two on my why-on-Earth-haven’t-they-invented-this-yet list:
What I need is a presenter that will allow me to bring my presentations along so I only have to bring one gadget. Sounds simple right? Wrong!! After two years of perusing dark alleys of gadget R&D – and actually buying this horrific arm-waving-monster at one point – I’m still no closer to finding a solution that actually works. And I know that you can get a promotional presenter that does this, but after my embarassing arm-waving failure I no longer trust gadgets obviously made to be thrown away.
So please MS, Logitech, Creative, and whoever, stop adding lasers, mouses, and friggin’hand-coolers to your presenters, and give me something useful.
Decor-friendly wireless sound-system
Maybe this is like the holy grail of modern technology and I just missed the memo, but why on Earth do I have to choose between wireless music with no surround, wireless surround with no option of playing music in more than one room, or a monster of a receiver with carport-sized bass-pumpers and two-inch cables snaking across the floor throughout my apartment?
AirPlay would be a step in the right direction if Apple would just stop hogging my wifi-bandwidth, add surround, and figure out how to get sound from my actual TV and not just the AppleTV plastic box they want me to stick under my TV. So for now, I guess I’ll have to try out Sonos and convince myself that the charge in Two Towers will be JUST as impressive with two Play:5′s in front and me jingling house-keys at the back of my head trying to emulate the sound of ten thousand advancing Orcs.
I’ll let you know how THAT goes.
But I guess that’s it for me on the gadget front. I did buy a lot of other gadgets: Four different pens (and one brush) for my iPad, two RC helicopters, a totally hacked AppleTV, and a Ziiiro Mercury watch that unfortunately scratches pretty easily, but you’ll have to ask me about those if you’re interested.
There is no question that the cloud is a great place for consumers, small startups, and even SMBs, but once you get into major enterprises, and particularly classic enterprises like FMCGs, where the majority of activities are based on end-to-end processes, and where the large numbers of users are either mobile or without regular device-access, problems start piling up.
This hasn’t stopped major ERP vendors, like SAP and Oracle from starting the cumbersome process of webifying their products, and some of them have even dabbled in providing ERP systems as a service, but before they get too excited, there are at least five major obstacles enterprises will need to overcome before they can fully escape to the clouds:
- Unreal identity. A lot see this as just a question of device-management, some DRM, and the right service for managing employee identities through the cloud, but you can’t replace physical and local verification of employee identities without loosing trace-ability, so until they plant a chip in our heads somebody will need to put their feet on the ground and actually talk to people to verify that they are who they log in to be.
- Variations in employee buying power. Although things are improving, I’ve heard of cost-to-salary ratios of up to three months in certain areas, so the fancy devices you buy in one country will be out of a reach in another, and unless you’re ok with subsidizing a steady loss of devices – which tax authorities tend to frown upon as it gives unfair advantages and/or creates artificial internal “taxation” – you will have to wait until prices drop or stick to cloud-services that also work over SMS.
- Limited off-line features. Even in our post-industrialized nations, a significant percentage of ground is not covered by mobile data-services, and once you go to developing nations the coverage is much worse. Most western companies don’t worry about this, but large parts of the world data-coverage is either monopolized and prohibitively expensive, limited to certain “development zones”, or simply impossible to implement because of the vast areas to cover. For enterprises with roaming employees who need to take orders, register goods, bring back empties, calculate discounts etc. you therefore need something a lot more feature-packed and off-line capable than Citrix and cached html5 to get things to work.
- Prohibitive legislation. The legislation in many countries severely limit the use of SaaS. In Europe alone we have personal-data laws, unions, local variations of Eurosox, and language-protection laws generating fines of up to €5000 per-document-per-day (I’m not saying in which country, but you can probably guess) that would make even the most cloud-happy CIO cringe, so until local governments get their heads out their… ears… erh… enterprises will stay behind.
- Outdated cost and licensing models. Finally, major vendors – and private-cloud IT departments – are having to turn their traditional cost and licensing models model on their heads to provide a per-user-per-month service-fee that supports variations in buying power, taxation, and all the other things in this list into account. This may sound doable, but never underestimate the complexities of merging the cost/benefits of a gazillion departments, contracts, and licenses into a single fee. I’ve seen more than one cloud-project short-circuit at the finish-line because somebody forgot something that completely blew the business-case or made the whole thing illegal in half the countries involved.
All in all, the 100% cloud-based enterprise is therefore still only a real option if you are small or information-based, and the time when major corporations will join in bulk, probably still some years off.
Now, I’m not saying it wont happen. Data becomes available in new areas every day, the services and devices mature, and there is no question that – with the huge push towards consumerization of traditional IT services and the incredible momentum behind privately owned devices – cloud will be an increasingly important factor even in major business.
What I am saying is that it will take time, and probably be a lot more complicated than it looks when you’re setting up your first few Dropbox accounts, logging into Zoho, and reading up on your favorite tech bloggers.
- McKinsey Quarterly – How new Internet standards will finally deliver a mobile revolution
- InfoWorld – 10 Hard truths IT must learn to accept
- Gartner – Creating New Policies for Employee-owned PCs and Notebooks (requires subscription)
- Microsoft – Calculating the cost advantages of private cloud
- UPDATED ArsTechnica – Office 365, Google Docs go down again, could give pause to the cloud-wary
If your IT costs are rising constantly on a wave of apparently critical legacy systems that you don’t know how to get rid of and nobody knows how to support, chances are you are missing the TCO/ROI sweetspot when scoping your business cases and projects.
Estimating how many users, servers, licenses, and features you need for the new shiny system you want to implement is relatively easy: just list all the things you need to get that up and running and stop there – but give me a few beers and I can rant for hours on why that is so horribly-not-at-all-and-under-any-circumstances true.
Just looking at your project may tell you something about what it will cost to get your system to work, but that is like figuring out what it costs to build a house without taking down the old one or moving the furniture. To make a proper business case, you need to look at the BIG picture and answer some of the hard questions like:
- What can you retire when the new system is up?
- How many years before the next major upgrade is due?
- Is it realistic to expect everyone to be expert users from day one? Day 500?
- Are you sure you have EVERYTHING in the project that’s needed to realize all the benefits you listed in your business case?
So to get a proper evaluation, you need to scope at least two aspects of your calculation and your project very carefully:
If you look at too few systems, it is easy to overlook dependencies and feature overlaps. You can make everything dandy within the project, but once you’re live all your benefits get hollowed out by a flotilla of annoying factors like:
- Users having to use the old systems for single tasks so you can’t retire them
- Data retention legislation so you can’t get rid of servers
- Legacy license agreements that means you have to pay for the same feature twice even though you don’t use it anymore, and so on.
On the other hand, if you look at too many systems - as you’ll sometimes see when overzealous guys in my position want to get ALL it costs for all systems on day one – you’ll just drown in data, and you wont be able to deliver any meaningful answer to anything.
In my experience, your best bet here is to cluster systems into domains like HR, Finance, Productivity, and so on, with as clear a boundary as you can manage, so you have a fairly good overview without being hampered down by too much detail.
This is not easily done – and particularly not within a single project where most of the stakeholders on projects have vested interest in the outcome – so you’ll probably need some permanent non-project roles to define the domains and take the long-term TCO responsibility for this to work properly.
The main thing to remember here, is that you can’t disconnect the project timeline from the TCO timeline: If you listed a benefit in your business case, it has to be realized before you end your TCO timeline.
Getting that timeline just right though can be a bit of a problem. Andy Kyte mentions nine years as the average time to fully replace a core IT system, and that’s probably spot on in most cases, but I usually take a less scientific approach and look at the software lifecycle of the product instead.
If you implement an IT system, chances are it will need a major overhaul in 4-5 years, and you want at least one or two of those overhauls to make sure you have a good idea about what’s going to happen. On the other hand, if you look much beyond that, the risk of the software being completely replaced by something else becomes so high that it undermines the validity of the TCO.
In my experience, the scoping sweetspot for the TCO timeline is somewhere between 5-10 years depending on the system you are looking at.
Working with TCO and ROI is not an easy task. As I’ve mentioned before it’s sometimes more art than science, and it can be tempting to give it up altogether and just look at each project individually, because after all, if we get the project approved, who cares about all the old stuff or the future. That will just take care of itself wont it?
Wrong. Of course. If you’re serious about making IT that is a competitive advantage for your business, you need to be not only good at scoping, you need to be better at it than everybody else, because in the end correctly scoping changes is what differentiates the good projects from the bad and the winning business from the ones muddling along.
For some reason I often find myself explaining basic Web 2.0 and Social Media Marketing concepts to people who have neither the time nor the interest to move much beyond the “hey is this a Tweet?!” stage.
So, although I’m totally aware that some of these concepts are still apexing the hype-cycle and have pundits all giddy with excitement over discussing definition minutiae I “dared an eye” – as we say in Danish – and made this presentation anyways.
To me, the main challenge is to get stakeholders to understand the basics, so if you can use it, feel free to download a copy (after reading my terms of usage), and if you have suggestions for improvements I’d love to hear them.
- Social Media Marketing: The Next Generation of Business Engagement
- Wikipedia – Web 2.0
- Linked Into Business – A Glossary of Social Media Terminology (overview)
So finally we managed to get all of us in one room to finish what we started. Maya and Matilde did everything in one-takes as usual and recorded some beautiful songs, while I produced (which with this Lion upgrade mainly consisted of getting the sound to work).
As soon as we’ve made the final tweaks it will be made available for download in stores, but until then listen and enjoy:
01 On the Border
02 He Took the Stars
03 For the Life
04 Last Glade of the Forest
05 Towards the Moon
06 Born With Eyes Wide Open
07 Where the Pathways End
08 I am Weak
12 Bleed for Me
13 Do you feel the fire
14 I Need Only One
15 Journey of the Stars
16 With Only Skin
17 Sweet Rain
There are so many factors and assumptions involved that it can become almost impossible to get a mutual understanding, and you’ll find yourself stuck in Sisyphusian meeting-cycles with overly technical terms and disbelieving eye-rolls fighting for airspace while business value is quietly climbing out the window.
The overall problem is that in most cases nobody really knows for sure, and if you’re not careful you end up with strong-arming as general design principle, where business will quote gazillion Euro potential benefits in additional sales and IT will refer to obscure security policies to force their will instead of identifying the simple solutions that could really steal away some market-shares from the competition.
This is why a common approach to creating business cases is critical to competitive IT, and why I’m sharing my template to get your input on how it works for you and hopefully some good suggestions on how I could improve it.
But before you get too excited, let me just give a few words of warning:
- High complexity: Even if you had a perfect template to work from, this is one of the most complex areas of IT, and one that depend on evaluating validity of input from pretty much all IT and business disciplines, so if you don’t have a solid understanding across fields, you’d probably be better off with guesstimating.
- Overlapping terminology: This template is for practical work. I am not a financial theorist and I know that there are a number of others ways to approach this, but in my experience consistency in communication is far more critical than what theory you adhere to, so feel free to replace my terms with whatever rocks your boat.
- Basic understanding required: This template will not teach you how to do TCO or ROI. It is a practical tool for those of you already working in this area and wanting more consistency in your approach.
In summary, I don’t take responsibility for anything you do with this tool or any outcomes you get from it. There is no golden goose or perfect tool that will do this for you. You have to rely on your own skill and experience to give you the answers you are looking for, and you have to establish your own good working relationship between IT and business to really get the benefits of all the amazing technology out there.
I’ll be sharing much more on this subject, so hopefully some of this be explained along the way, but for now download, play around with the template, and let me know how it works for you: