Perishable Software

In the 60s and 70s, computers were a massive investment, and so were the associated projects. I remember in the late 90s, a major Australian telecommunications company considered its billion-dollar investment in a CRM (Siebel) a capital investment to be depreciated over 20 years. Today, thinking of computer systems as a capital investment to be depreciated over long periods is a misnomer.

Even then, the status quo was absurd. The telcom's system was so bad that only a select few (highly trained, with years of experience) could navigate it to record the sale of a new phone to a new customer. Anyone who went into the store in the mid-2000s to buy a mobile phone will remember that the system was already overdue for replacement. I used to offer a $200 cash bonus to anyone who could complete my order in less than 45 minutes. I did this at least five times, and no one ever managed to get it done.

But because the retailer had committed to a 20-year depreciation schedule, replacing the system would have been political suicide — they'd have to write off a massive asset and take a loss. Career-ending stuff.

There's a lesson here for all of us. The pace of change in business systems has accelerated dramatically over the past few decades, partly due to the near-zero cost of computing. In this context, viewing digital solutions as long-term assets is no longer appropriate. Thinking this way holds us back, as it did for the telco.

Some of the old terminology is an interesting lens on this. For example, "Big iron" is 70's-era slang for an extremely large, expensive, and fast computer. It often referred to oversized machines like Cray's supercomputers or IBM's mainframes. The phrase "big iron" was used to differentiate those large computers from the new, smaller minicomputers that came on the scene at that time. But "big iron" is also a mentality that has outlasted the physical reality of those old computers. I still see too many organisations thinking of their digital systems as if it were "big iron".

My client at Monash University summed it up perfectly in a recent talk at UniMutual this year. The talk is short and worth watching; I've fast-forwarded to the relevant bit here. Trevor makes a few strong points:

• Many solutions have a much shorter shelf life than in the past.

• Building quickly and replacing or rebuilding makes sense if you get a return on investment from the temporary solution (i.e., it pays for itself).

• Short timeframes (days, not months) and immediate ROI are often possible.

• Modern digital technology changes so fast, there's no guarantee a particular tool will still be around in ten years.

I like this response to "this was built in a hurry years ago and now we have to fix it":

"[This was a] big problem. Would have been millions of dollars, multiple years, committees, everyone and their dog trying to get involved. And it probably wouldn't have ended up a better project.

Instead: Modern technologies, modern approaches, just a few people, ripped it out.

ROI on that for six years!

And now another quick rebuild to get it going in the next technology."

Systems are now temporary stepping stones to better business. As long as they give a return on investment at each stage, it makes perfect sense to throw them away. The alternative is nonsense.

Andrew Walker
Technology consulting for charities
https://www.linkedin.com/in/andrew-walker-the-impatient-futurist/

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