Response to On Site Development

May 31, 2008

On May 14th my buddy Shawn wrote On Site Development. Aside from the ambiguous title (I originally thought it was an article on web site development, rather than the more appropriate on-site development), there were a number of things that I felt could be expanded upon. I started by simply commenting on his post, but the comment hit half a page and I had to admit to myself that I was, in fact, writing an entire new post.

Updating the computer systems in these restaurants is a question of scale. Sure, it seems cheap to update the software on the 6 computers in a local fast food restaurant. However, a certain “largest fast-food chain in the world” has 31,000+ locations (according to Wikipedia). Now I know how much I would charge to update greasy fast-food computers, and if you multiply that by 31,000, you get a whole lot of dollars. It just doesn’t scale well enough to make it worthwhile. The bottom line is, the companies do cost-benefit analysis on all projects, and the cost of re-doing the messed up orders is apparently less than the cost of patching the software on a quarter million little cash registers and kitchen computers.

It's the same logic that lead to Coke being sold for 5 cents for more than 60 years, spanning two world wars and the great depression without fluctuating in price. The vast majority of Coca-Cola during that time period was sold from vending machines. These vending machines only accepted nickels, and once a nickel was inserted, a Coke came out. That’s it. Nothing digital, no multi-coin receptacles, just insert nickel…receive Coke. The cost of replacing 100,000 vending machines was far higher than the profits they would get by increasing the price of coke slightly. Only after World War II, when industrialization and the suburb were really taking off, did Coca-Cola start to phase out their existing vending machine line and replace it with machines capable of charging more than 5 cents per bottle.

Of course, we all know how coke machines operate now. Computerized bill changers, many of them hooked up to the internet, allow Coke to charge upwards of $3 for a 20oz beverage on a hot day at a theme park. Coke even attempted (in 2005) to fluctuate the price of Coke based on local weather conditions. People would want a Coke more on a hot summer day, so why not charge more for it? (Because the public backlash was severe to the point where boycotts were suggested the very same day Coke announced their new plan, but that’s another story.)

The fast food problem Shawn mentioned, as well as the vending machine problem, is why so many companies are moving onto the web. Online retail is exploding at a rate that can be described as a “barely controlled Bubble.” To tie back in with my comments on the fast food restaurant, this means that all your customers see the exact same website, written by the exact same piece of code. Want to change the way orders are displayed? Well simply alter the order display page, and every customer in every country from now on will see that new display format.

This doesn’t just apply to retail, however. Many companies are moving towards web-based internal pages. When I got my mortgage, the load officer entered all my information into a web form on their intranet. This is brilliant, because it takes away all the cost of synchronizing the employee computers with the software, it removes the time needed for upgrades, and (most importantly) it means developers don’t have to come into the office at 4am to ensure that upgrades go smoothly before the start of the business day. So any of you business owners out there that have had to deal with the nightmare of upgrading antiquated POS software on dozens, hundreds, or hundreds of thousands of computers, consider making everything a web site.

SoftLayer has geographically diverse data centers, so your stores can always log in to a nearby servers to cut down on latency, and we allow for VPN access, distributed databases, and real-time backups, making a web-based solution preferable to even the hard coded local systems that many stores use now.

-Daniel

Comments

May 31st, 2008 at 10:12pm

I agree that centralizing internal business functions via a SaaS model is compelling; however, an oft-overlooked issue is disaster recovery. One advantage of a PC sitting on each desk is that you end up with a distributed type of computing platform.

Consider this ... you are a mortgage broker with 20 employees using a intranet web portal with a centralized application tool. The tool crashes. All 20 employees are idle. Compare this to having 20 desktops with their own independent software. If one of them crashes, only 19 employees are idle.

I am a supporter of SaaS approaches but the risks of centralized business functions must also be considered.

 

July 2nd, 2008 at 11:17am

That seems like a big concern at first, but that's why SoftLayer offers redundancy in every configuration imaginable. You can have a database in Dallas replicate to Seattle and backed up in Washington DC. With a properly configured backup system, downtime can be minimized and be far less than downtime resulting from performing upgrades on multiple client machines.

For a scenario where there are only 20 employees it may not be beneficial to use a centralized system, but anything higher than that deserves it, I think. The argument can be made analogous to the current trend of desktop applications moving to the web. I write my blog posts in google documents, despite having Word available 3 clicks away. I do that because I can then edit them from home, and because I know I will always have access to the newest features if I use google docs.

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Comments

May 31st, 2008 at 10:12pm

I agree that centralizing internal business functions via a SaaS model is compelling; however, an oft-overlooked issue is disaster recovery. One advantage of a PC sitting on each desk is that you end up with a distributed type of computing platform.

Consider this ... you are a mortgage broker with 20 employees using a intranet web portal with a centralized application tool. The tool crashes. All 20 employees are idle. Compare this to having 20 desktops with their own independent software. If one of them crashes, only 19 employees are idle.

I am a supporter of SaaS approaches but the risks of centralized business functions must also be considered.

 

July 2nd, 2008 at 11:17am

That seems like a big concern at first, but that's why SoftLayer offers redundancy in every configuration imaginable. You can have a database in Dallas replicate to Seattle and backed up in Washington DC. With a properly configured backup system, downtime can be minimized and be far less than downtime resulting from performing upgrades on multiple client machines.

For a scenario where there are only 20 employees it may not be beneficial to use a centralized system, but anything higher than that deserves it, I think. The argument can be made analogous to the current trend of desktop applications moving to the web. I write my blog posts in google documents, despite having Word available 3 clicks away. I do that because I can then edit them from home, and because I know I will always have access to the newest features if I use google docs.

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