INTELLIGENT SYSTEMS
Volume X, Number 2 June,
2008
Copyright © 2008 Chenault Systems, Inc. All rights reserved.
By Bill Walker
An
ant laboriously tunneled into MIT and carried around calculus books of 100
times her own body weight, earning an IT degree and an MBA. Then she secured a
business loan and worked on her startup corporation 16 hours a day, 24/7, all
summer long. Her company made software that cured cancer, wiped out computer
viruses, and walked your dog, all for $39.95 with free updates.
A
grasshopper was blown into Florida State by a hurricane, and majored in UV
Absorption and Socializingology, drinking and singing with the other
grasshoppers. Eventually he was dragged off the beach and forcibly graduated
with a degree in Orthoptera Studies. He spent the summer at a cushy job in an
air-conditioned office in a large bank and spent every evening singing in
karaoke bars. Once a week he would take a pile of nonperforming mortgages, chop
them up into tranches, and mark half of the tranches "AAA" while
chirping cheerily. Then he would sell them to the other insects at high prices.
The
ant was putting together the 401(k) options for her ant employees’ retirement
accounts when she noticed the grasshopper’s subprime offerings hiding among
real bonds in bond funds, banks, brokerages, and as prizes in cereal boxes. The
ant carefully avoided buying any subprime debt, "AAA" or not. The ant
and her employees put all their savings into bonds and stocks from companies
that made good products that other insects really wanted.
When
winter came, the subprime tranches that the grasshopper had sold all withered
away and turned to dust, even the ones he had marked "AAA." The
grasshopper’s bank, the banks that had bought securities from them, and the
Carlyle Group’s hedge fund all had empty larders… actually more than empty,
because they owed more than they had.
So
the Federal Reserve printed up hundreds of billions of dollars and Treasury
bonds and gave them to the grasshopper in exchange for the dried-up dust of the
subprime securities, because the grasshopper’s bank was "too big to
fail." The grasshopper was also allowed to borrow from the Fed at a
special cheap rate that no one else could get, "to give him
liquidity." The grasshopper went on to his next scheme, which was to
securitize tranches of nonperforming time-payment agreements for large-screen TVs
(these were called "subprimetime securities"). The grasshopper became
wealthier and wealthier, and his offshore corporate shells lived happily ever
after in the Cayman Islands.
The
ant and all her employees went bankrupt because their customers couldn’t afford
to buy software or CAM machines when gasoline cost ten dollars a gallon. The
ant couldn’t get a loan to start another company because of the credit crunch
created by the grasshopper. The ant retirement accounts were so reduced in
value from inflation that they could never retire, and the ants spent their
last years working as the grasshopper’s servants with no medical insurance.
The
grasshopper looked down from his office tower at the scurrying ants carrying
heavy burdens far below. Then the grasshopper knew:
"It
is best to be the one who prints the money, not the one who works."
March 22, 2008
Bill Walker [send him
mail] works in HIV and gene therapy research in Rochester, Minnesota.
Copyright
© 2008 LewRockwell.com
Chenault Systems is often called in
by organizations to enhance a particular software system bought
off-the-shelf. Many times, after
objective examination, we determine the system, although a good tool, is not
right for the process.
We are independent from all software products and
vendors. While our staff members may be
certified in certain software products, we are not aligned with anyone. Independence and lack of alignment allow us
to be objective. This objectivity is
what makes Chenault Systems unique from most other firms.
Physicians within the medical profession have the same
philosophy. Doctors are completely
independent (or should be) of drug companies and medical equipment companies,
regardless of specialization. Management
consultants are really business doctors; and, as a management consulting firm,
Chenault Systems specializes in information technology. Our clients rely on our independence to cure
their systems and organizational problems in an objective manner, much like how
a patient relies on the physician.
Over the years, we have encountered many situations
where management was persuaded by skilled sales people to purchase a software
package to streamline and automate a process.
Typically, the in-house information technology group and a few high
level managers evaluated the product, comparing the features and benefits to
other systems, and no one consulted the end users, the true experts of the
process. The typical result: A round peg is forced into a square hole,
forcing people to change the process to match the product instead of the other
way around.
This scenario occurs for everything from small asset
management systems, costing a few thousand dollars, to the very large ERP
systems, costing millions of dollars. In
many cases, contracting an outside firm to custom build a system would have
been less expensive than purchasing from a software vendor. A less expensive custom-built system is
possible because today’s products allow relatively rapid application development,
which dramatically reduces development cost, and at the same time allows the
client to maintain process control and ownership.
When looking for a
software solution to your current business problem, you need to carefully
examine your options before deciding what will best meet your needs. Both options bring several considerations.
The following are some of the questions before deciding on a solution:
·
Does it meet 80%
of your essential requirements?
·
Is the product easy to use?
·
If the product is
complex, would your staff use the product as it is intended?
·
Would you be
paying for a lot of features that you
don’t really need?
·
Does the cost of
the product, including extra features you don’t need or won’t use plus training, provide you with the returns you need
in order to justify the expense?
·
In order for your
staff to use the product effectively and efficiently, is additional training a necessity?
·
Do you know the cost of training and support before
you buy the product?
·
Is the cost of
training or support reasonable
and within your budget?
·
Are you required
to pay additional licensing fees?
·
When you buy
off-the-shelf software you are frequently subject to licensing fees. The
initial purchase price for a product often limits your right of use to a
limited number of current users. You
have to pay extra if you want the product to be accessible to more users.
In
addition to the above questions, you also need to consider the following
points:
·
Your up-front investment
cost could be higher than for an off-the-shelf package, so you need to factor
in your long-term return on investment
to determine the cost benefit of a custom solution.
·
The time frame by
which you require your application must be carefully determined. Sufficient lead-time is required in order to
ensure that the product will be ready on time, whereas an off-the-shelf package
can usually be picked up whenever needed.
·
Sometimes a
custom application can be integrated
into an off-the-shelf product. An example of this is when you want to add a
feature to an off-the-shelf product that it doesn’t currently have or that is
very expensive to acquire as a ready-made solution. The latter situation would
more likely apply to very large and expensive off-the-shelf products.
·
Because custom
software is designed to meet your specific needs, it will do exactly what you want it to.
·
With a custom
application you pay only for the features
you need and have asked for.
·
A well-designed
custom application should be easy to
use and intuitive.
·
The cost of and
amount of training required should be known up-front before you commit to the
project. Additional support can often be negotiated on an as needed basis.
·
You need to
identify how much your problem is costing
you if left unresolved.
·
There are
normally no licensing fees with
custom solutions. Once you have paid for the product, you can usually make
as many copies as you need.
Quote
Worth Noting
“It is not the critic who
counts: not the man who points out how the strong man stumbles
or where the doer of deeds could have done better. The credit belongs to the man who is actually
in the arena, whose face is marred by dust and sweat and blood, who strives
valiantly, who errs and comes up short again and again, because there is no
effort without error or shortcoming, but who knows the great enthusiasms, the
great devotions, who spends himself for a worthy cause; who, at the best,
knows, in the end, the triumph of high achievement, and who, at the worst, if
he fails, at least he fails while daring greatly, so that his place shall never
be with those cold and timid souls who knew neither victory nor defeat.” --
Teddy Roosevelt