Dear client, the truth about software development

Dear Customer,
I think its time we in the IT industry came clean about how we charge you and why our bills are sometimes a bit higher than you might expect.

The truth is, when we start and IT project we just don’t know how much time and effort it will take. Consequently we don’t know how much it will cost. This isn’t a message you like to hear, particularly since you can be absolutely certain that you know what you want.

Here in lies another truth, I’ll try and put it as politely as I can, you are, after all, a customer and really I shouldn’t offend you. The thing is, you don’t know what you want. O yerh, you know in general (usually) but the devil is in the detail. And the more you try and give us the detail before hand the more likely it is to change. Each time you give us more detail you are offering more hostages to fortune.

Just to complicate matters the world in uncertain. Things change, companies go out of business, customer tastes change, fashion changes, Governments change and competitors do their damnedest to make life hard.

Yes it is true we can sometimes gold plate things. Yes some of our engineers like to do more than needed, and yes we have vested interest in getting things added so we can charge you more.

It is also true that you have add things: you quite legitimately think of things after we’ve begun, you quite naturally assume something is “in” when we assumed it was “out” and you also try and put one over too.

(Lets not even talk about bugs right now, it just complicates everything.)

Frankly, given all of this it is touching that you have so much faith in IT to deliver. But then, when IT does deliver, boy, does it deliver big. Look what it did for Bill Gates and Larry Page, or Jeff Bezos of Amazon, or FedEx, the list goes on.

So how do we ever talk you into this?

Well, we package up this unsightly mess and try and sell it to you. To do this we have to hide all this unpleasantness. We estimate how much time we think the work will take, actually these “estimates” are little better than guesses; human’s can’t estimate, most companies don’t have historical data and for those that do have data most of it is worse than useless.

So we get this guess, sorry estimate, and double it. Well maybe we double it, we might treble it, and when we see the new number, if it looks too much we might reduce it. And then we work out whether you will pay it.

That might sound awful but remember: we could have guessed higher in the first place.

Anyway, we don’t know which number is “right” but to make it acceptable to you we pretend it is certain and we take on the risk. We can only do this if the number is sufficiently padded. And even then we go wrong.

If the risk doesn’t happen then we get a fat profit, if the risk comes to pass we don’t get any profit, maybe we make a loss, and if its really bad you don’t get anything and we end up in court.

Really its all a question of risk: we try to present a clean, low-risk solution to your problem, and in doing so we take on a lot of risk. The alternative is that you take on the risk - and the mess - and do it yourself. (Unfortunately, another sad truth, is that as far as anyone can tell in-house IT is generally not as good as specialist providers so if you do decide to take on the risk you actually increase it.)

There really isn’t a nice simple solution to this, you have to work with us on this.

Thats the first part of the solution: you, the customer, have to be prepared to work with us, the supplier, and work with us again and again. This will reduce the risk.

The second part of the solution is: you need to be prepared to accept the mess and share the risk with us. If you aren’t prepared to take on any risk then we will take it on, and we will charge you for it, and since the risk is a lot we will charge you a lot.

Sharing the risk also has the effect of reducing the risk. Once you share the risk you have a motivation to reduce it.

If you are prepared to accept those two suggestions then lets press reset on our relationship and talk some more.