tag:blogger.com,1999:blog-12948038.post5252512847342305560..comments2023-07-29T09:15:17.416+01:00Comments on allan's blog - Agile & Digital Business: Software supply & demand - this time its Agileallan kellyhttp://www.blogger.com/profile/06262139490250478379noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-12948038.post-39573494454364263822014-01-26T17:17:37.558+00:002014-01-26T17:17:37.558+00:00The biggest change which automated testing introdu...The biggest change which automated testing introduces is the change in the cost of releasing the software, the "transaction cost" of getting software out the door. Reinertsen's Flow goes into detail on this.<br /><br />This is significant from the point of view of how a firm functions, in the sense of Nobel prize winner Coase's "The nature of the firm", available here: <br /><br />http://www.doutorlinux.com/pesquisas/economia/institucional/Coase_Nature_Firm.pdf<br /><br />In it he talks about the point at which it makes more sense for a company to internalize production vs creating a service on their own. In short, your analysis is a special case of this underlying relationship among the incentives of the market participants. <br /><br />This mental model would suggest that if it's possible for firms using software to internalize the production of software using agile at a lower cost than by using external providers (regardless of how they produce it), it will be rational for firms to push for that. External software providers (agile or not) will be forced to deliver at lower cost using agile or will go out of business if they refuse to change and don't provide enough value for money. There's also the whole issue you mentioned at @londoncd, that external consultants tend to work on projects, which causes its own problems. At the same time, if a company is in a serious pinch, it will often be capable of paying high consulting fees and still earn more than they pay for the consulting. This is the typical prevention vs. cure argument.<br /><br />While I am certain the curve shifts outward, I'm not yet exactly clear on how the elasticity of supply is affected. I can kind of see where you are going, but I don't quite understand all the links. If you can expand more on this, it would be interesting. <br />Lukehttp://www.agilelasagna.comnoreply@blogger.com