Unprepared for hidden costs

Packaged applications' ugly surprises include training time, integration woes

And, of course, there's the lost productivity of users as they abandon their usual way of doing things and climb the learning curve of the packaged app and its new processes.

These hidden costs are much more subtle because of a fatal weakness of the finance professions: Most costs don't fit into a chart of accounts. No CFO can trace the inevitable external cost that Database Solutions' Brown cites: "How do you get focused mind-share from the users in flattened, lean, and mean organizations? They've been re-engineered, they're doing three jobs, and you want them to be effective [while] learning a massive new way of doing their work. They're out of altitude, air speed, and ideas" and will end up underperforming any estimate.

Layer V: the death spiral

Every corporate neurosis festering inside an organization can derail deployments by lurking in the background and loading hidden expenses. And in a co-opetition-filled, merger-frenzied, online-partnershipped world, it doesn't end with internal politics; the inter-organization costs can be astronomical, too.

Enlighten's Zeffer has seen the effects of these hidden costs firsthand. His organization built a CRM system for a billion-dollar homebuilder. They front-loaded the analysis and design, spent a year mapping how the parts of the company would integrate, and crafted it around the company and its culture.

The unforeseen factor was a merger. The client company was the acquirer, but when the two entities merged, the smaller company had a bigger IT group, so the acquired company forced its technical infrastructure on the acquirer. The acquired IT group insisted -- without knowing the analysis and design -- on micromanaging, asking for explanations of every fragment of the system that was already explained and signed-off, delaying its implementation, Zeffer says.

The single biggest hidden cost associated with packaged apps hasn't hit the industry yet, but Atlantic System Guild's DeMarco believes it's inevitable, and it's a killer. He calls it "latent turnover," and it has deep roots.

By 1997, many companies already had a three-year backlog of development work; a backlog that was exacerbated by the pressing needs of immediate, must-do-now initiatives such as Y2K and the Euro conversion. "There's got to be seven years of backlog now," DeMarco says, and the developers who are left must work on the relatively banal tasks of maintaining and buffing packaged vendors' code -- and it is demoralizing.

"The result is latent employee turnover ... they've decided to leave, they're checked out, but they're still there," DeMarco says. "The companies retreating from organizationally discriminating development have left developers disenchanted, but they are not leaving because in this economy there aren't options."

Without a push for changes in packaged applications and their treatment, when the economy does turn around, resources for attacking the gargantuan backlog will become available -- but disenchanted developers, now with other options, will leave in droves. DeMarco sees this putting CTOs in a panic: a sudden upsurge of work for developers but decimated coder ranks.