cost claims and the law...

Been a long time since last post.  It's been a busy period since the start of 2011.

Mostly because we are in a period of turmoil when apparently every man and his dog is trying to get into our site for "outsourcing".  Even though that is most definitely not what we are doing.  But never let reality interfere with a good dose of marketing...

We've seen a lot of "cloud computing" and SaaS offers.  But also extended to services.

The funny thing of course is when we actually see the prices being proposed, it quickly becomes clear that the whole SaaS and cloud thing is nothing more nothing less than a complete rip-off, proposed and promoted by folks who haven't got a clue what IT is all about.

I'm quite sure I'm an "original", but when the entire SaaS replacement for one of our applications costs per year twice to three times what we currently pay in combined maintenance and support fees, someone has to do a lot of explaining as to *exactly where* is the ROI coming from?

But we already knew this was going to be the case. 

And claims along the lines of "outsource the expensive dbas" do little to reassure anyone that these people know what they are talking about.  If nothing else because the so-called "expensive" dbas are a tiny fraction of the total costs AND are shared by ALL applications.

But more on that right now.

You see, for the last umpteen years we have been hearing the IT pundits claiming how expensive it is to hire personnel. 

Then we check what the service providers and hiring agencies are charging for their contract services - around $1500/day for a reasonably capable professional. 

And we check how much are the hiring agencies paying for a person of the same calibre - around $500/day.

Call me a mathematical genius if you like, but I can see a discrepancy there of nearly $1000/day.  Where is all that moolah going to? 

 Ah yes: the "hidden costs" you say?  Let me enlighten you about those. 

Around three weeks ago a seminal court case in NSW was won by the contractor.  Who happened to be nailed by a hiring agency for going direct with a client.   Apparently, there was a clause in the contract that claimed this was illegal.

It turns out - after 2 years in court! - that not only is it perfectly legal for a contractor to go direct, but also ALL exclusivity clauses in hiring agency contracts are completely illegal, invalid and unenforceable, as of the end of that court case.

And one of the more convincing arguments  in favour of the contractor was that it was her who negotiated the last two renewals: the hiring agency simply rubber-stamped them while continuing to charge the huge margins.

"hidden costs", eh? 

More like TOTAL RIP-OFF, in plain old English...

I'll bet there will be a lot of noses out of joint over that one!  But I predict the days of $1000/day mark-up by hiring companies will soon be gone. 

Of course: in the process we'll be treated to another bout of offshoring at $200/day.

But anyone buying into that sort of deal better be aware of the old adage:

"you pay peanuts, you get..."!

Anyways, enough of the politics of IT in this state.  It's really not worth wasting any time on, for its sheer stupidity.

This showed up recently near our local coffee shop:

Yikes!    :)

And for those who watched the movie, this was recently at the Australian Museum:


Catchyalata, folks!


Blogger Tim... said...

I'm annoyed by the "one size fits all" attitude of some of the cloud and outsourcing companies. There are definitely some cases that can benefit from it, but at the same time there are cases where it is a disaster. Of course, the proponents of such things fail to see this and spend their time convincing your gullible IT director that they can walk on water and their sh*t don't stink.

These things always have to be assess on a project-by-project basis or they are doomed.



PS. Nice to see you posting again. Helps bring out the grumpy old man in me. :)

Wednesday, March 23, 2011 8:53:00 pm  
Anonymous David Aldridge said...

Many companies just don't understand IT. They think that it's just another cost centre along the same lines as HR (but not as good looking).

If they woke up they'd realise that a well run, educated and motivated IT department is a competitive advantage.

Wednesday, March 23, 2011 11:35:00 pm  
Blogger Noons said...


Yup, the one size fits all approach is indeed the norm. And guess who is pushing it?
Yes: Oracle, alright!

Apparently there is a new group inside Oracle from the McKinsey/Gupta stable, who is hell bent on selling SaaS no matter what.
The cynical among us would claim Gupta would have a vested interest on that given his country of origin but I'll let that go for the moment.
This group has been going to all existing customers almost forcing them to go SaaS, regardless of the fit. I know of at least three major customers where that has happened in the last 3 months.

In a normal industry that would be called CHURNING as there are no new customers - only existing ones being resold the same old same old.

But at Oracle NSW, that is called "new market"...

Oh, BTW: saw the movie last night. Indeed it is much better than Independence Day!


That is indeed what IT departments were created for: to provide a competitive advantage.
How is that coherent with a one size fits all IT model is beyond anyone's grasp. But when the real motivation is churning, it all becomes crystal clear...

Thursday, March 24, 2011 7:38:00 am  
Blogger Joel Garry said...

Then there's the security issues.

I wonder if the cloud providers won't let your data fade away if they use raid F?

word: ramingsg

Thursday, March 24, 2011 8:44:00 am  
Blogger obakesan said...

Its interesting isn't it. Its more annoying when (as the potential contractor) I get interviewed by a just-post-teenager who sees on my resume that I have Oracle 10g OCP certification and over 10 years with Oracle ask me "do you have any experience with an RDBMS"

naturally I ask "do you know what an RDBMS is?" to which the anwwer is a sheepish "no, not really, there's just too many acronyms in IT to know them all"

and these are the people taking over half the costs of supplying me?

I can only put it down to the complete twatted-ness of upper management not knowing MySQL from OpenSybase or knowing the first thing about what technology actually is.

Possession of an iPhone does not count as a ticket into knowing about what your on about if you ask me

Thursday, March 24, 2011 12:11:00 pm  
Blogger SydOracle said...

Have you got a reference for that court case ? Just curious, you understand :)

Thursday, March 24, 2011 1:57:00 pm  
Blogger obakesan said...

"you pay peanuts, you get..."!

I was in Tallin a few years ago and this fellow was selling honey roasted peanuts on the street. While we were chatting a fellow came up and asked:

"how much is a small bag of peanuts"

"1.50 euro" said the seller ", and they're all the same size"

"ok, please give me two small ones" said the customer

Thursday, March 24, 2011 2:16:00 pm  
Blogger Noons said...


Costs, remediations and indemnities still to be awarded. Once that is finalized - soon, I hope - it'll be in Caselaw NSW and I'll post here or send you a link.

Thursday, March 24, 2011 10:24:00 pm  
Anonymous us vpn said...

You have to always choose a company that you can trust your files.

Wednesday, November 23, 2011 4:21:00 pm  
Blogger Noons said...

Sorry usvpn: there is no such thing.

There is a reason why they are "my" files. Sending them somewhere else where I have no means of control of, is a recipe for disaster.

You don't ask someone else to carry your tax files and your wallet with your credit cards and bank details, do you?

Wednesday, November 23, 2011 4:56:00 pm  

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