Sunday, August 06, 2006

TCO with a Baseball Bat

A recent Forbes cover story profiling Larry Ellison and Oracle proclaimed:

"For every dollar corporate customers spend on new software, they spend $6 implementing it and getting it to talk to other programs."

Put another way:

"If you think it costs a lot to buy a license for software, wait until you see how much it is going to cost you to use it."

What a terrible indictment of the software industry. Even the open source vendors who clang and bang about the expense of proprietary software licenses are often missing the big picture of the user experience. And customers are complicit in this debacle when they accept that they are going to have 4 levels of server infrastructure associated with promoting software: development, test, QA, and production. Why did you pay so much money for a "certification" if nothing is really ever certified until you, the customer, put it through its paces?

It is not surprising that SaaS vendors such as and appliance vendors such as Barracuda Networks are now the rage of the software industry. Both of these companies assume responsiblity for component integration, and they build their software to interoperate with every other required software element via standard protocols like TCP/IP. It is also not suprising that VMware is growing 73% annually by providing technology that enables virtual appliances, decoupling the infrastructure layer from the application layer which reduces "certification" to copying a file to a system.

I still chuckle every time I read a Microsoft funded study that reveals the TCO benefits of Windows server relative to Linux. In most cases, Windows is proclaimed to be anywhere from 10 - 25% cheaper to own for some certain workload - the equivalent of counting gnats on a rhino's ass. The point of Linux from a TCO perspective is that for Unix based applications (which won't run on Microsoft Windows anyway), the customer gets 3X the application performance on hardware that costs half to one third the price of proprietary Unix, yielding a price performance benefit of 6 - 9X. This breakthru performance for the customer is TCO that swings like a baseball bat.

Like Linux in the Unix market, SaaS, appliances, software appliances, and virtualization all swing TCO like a baseball bat. If you are a software vendor, whether open source or not, you better start warming up in the on-deck circle with a similar capability, or you will soon be headed for the showers.


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