Sarquol Ltd

What is the relationship between the performance of a system and its cost of ownership? This isn’t the start of a bad joke, but a question that I have needed to consider in detail recently. The question is more involved than it may seem initially, because of the factors that are implicit in the necessary analysis:

• The most obvious approach to assure performance is to have sufficient capacity from day 1 to allow the system to perform in the long term. This means that you don’t, in theory, need to monitor the system carefully. The problem is that you then buy considerable capacity up front – which may be an expensive approach given the falling cost of hardware and the reducing time value of money. This approach is also liable to involve extensive up-front testing, which further extends any project pay back period.
• The other extreme is to have hardware, software and procedures in place to only install capacity on a “just in time” basis. This means that you only invest in capacity when it is strictly necessary. In turn that means there is more spend in monitoring, projection and control. It also leaves a question over the objectives during volume and performance testing, and exposes the organisation to a level of additional risk.
• There is an intermediate point where capacity is installed that is believed sufficient to cover a period (such as a year). This is coupled with an end of period review process that examines a need for extra capacity in time for the end of the period. This needs monitoring and projection, coupled with some purchase of excess capacity.

Thus the answer to the original question depends on the strategy adopted for capacity management. Unfortunately, the most appropriate strategy inherently depends on the individual situation. If the cost of the hardware needed in the long term is low then up front installation of the projected capacity requirement makes sense. If the organisation already has the necessary tools and procedures to meet just in time capacity management then that would make sense. What is most critical, however, is that this is a management decision made with a through understanding of the considerations and implications.

If you would like advice, or to discuss how to decide on the most appropriate approach in your circumstances, then please feel free to contact me at dh@sarquol.com, or call on +44 7887 536083.

This entry was posted on Tuesday, January 15th, 2008 at 10:18 am and is filed under Other. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.