Thursday, July 31, 2008

Food For Thought: Can You Have It All - Faster, Better, Cheaper?

Return of the FBC Mantra
With pending economic uncertainty in sight, almost every conversation in the past 2 months has referred back to the mantra of Faster, Better, and Cheaper (FBC). Maybe it's part of living here in the heart of high tech companies where product life cycles are as a short as the next haute couture dress on a Paris runway model. But we're hearing it more and more across all industries. Is this a new client based reality or just another step towards the price-based commoditization whirlpool? Let's take a look at the components:
  • Faster. Can you get this to market faster? Can you reduce the time it takes to sell the product? Will you be able to collect money more quickly? Can you respond to a safety issue more quickly?
  • Better. In the eyes of a customer, is this a significant improvement? Are the trade offs we make worth the effort. Will this compel someone to select our offering?
  • Cheaper. Can we do this for less? Can we do this with less people? Are there regulatory or compliance issues that prevent us from reducing cost? Do we have to hire so many people? Do we have to hire so many good people?
Market based reality shows it's tough to achieve all three: One could argue that it's been next to impossible to support all three for all industries. For example, in the March 2000, NASA FBC Spear Report, a former NASA engineer stated that "the faster, better, cheaper" approach that pushed agency engineers and scientists to crank out more frequent, low-cost, and stripped down missions was a failure. In learning from the aftermath - we are seeing that top technology trends in the enterprise software industry do not normally support all three either. Two out of three seems to dominate current trends. For example:
  • SaaS. Faster - rapid deployment, real-time upgrades, 99.99% uptime and reliability. Better - more dynamic UI, newer functionality, configured not customized. Cheaper - this remains to be seen. Today ROI studies over a 10 year period show that SaaS is cheaper for companies with less than 1000 employees. Once over 1000 employees, we see SaaS costs comparable to on-premise. This becomes more of a life style thing.
  • Third party maintenance providers. Faster - this is debatable in terms of responding to regulatory updates, vendor changes, etc. Better - users often find that vendors like Rimini Street optimize the instance when they bring over the product. Cheaper - up to 1/2 the cost of maintenance price can be reduced which frees up money to invest in all the other projects that have been neglected for some time.
Your turn.
You've heard my view. Got an example where all 3 work? Or do you think this is all a fallacy? Maybe it's true that, "You can only have 2 - Faster, Better, Cheaper" in enterprise software? Looking forward to your comments!

(The personal contents in this blog do not reflect the opinions, ideas, thoughts, points of view, and any other potential attribution of my current, past, or future employers. All NDA's have been honored.)
Copyrighted 2008 by R Wang. All rights reserved.


Pascal S said...

Something always gives with FBC. I've never been able to crack the code!

Esteban Kolsky said...

ok, finally something i can talk about...

in all my years as a consultant and systems deployment person for different organizations i learned only one thing: FBC, choose two - the other is your cost.

Faster and Better? it ain't cheap
Cheap and Better? it ain't fast
Faster and Cheaper? it ain't good...

trust me on this, i have searched and searched... there is not utopia i have found where all three are present.

pick two, the other is your costs for getting those two: the basic idea of a payoff in life, represented in biz.


Michael Ni said...

Let's not confuse what has become a much lower cost of production (e.g., agile development) with an enterprise software company's ability to deliver it to to a broad market. Many startups, including small companies like NetSuite, clearly serve their specific market better, at a lower cost (both to use and to produce), as well as much faster cycles to market. To use that same example, NetSuite faces the challenge of making it better for a broader audience ... and that will be the rub.

Stefan said...

The software models of today force everyone to faster, cheaper. We have not seen any gains in better. functionality from client server to web and now to SOA continues to fall behind for the legacy players like SAP and Oracle. Newer entrants using SaaS seem to get faster and cheaper. I agree with Ni-san that better remains the question.

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