Choosing the right technology often comes down to cost – the time and money required Total cost of ownership (TCO) is as ancient as enterprise software itself. While TCO has been a mainstay for decades, there’s another cost that’s perhaps more onerous and far less discussed – total opportunity cost of ownership. As new technologies and paradigms come and go at an exponentially faster rate, companies need to keep their options open and take advantage of new and better ways of doing things.
TCO consists of two big areas – the asset’s purchase price and the continued operating cost over the lifetime of that asset. Companies may choose to purchase managed solutions, implement and manage an open source solution, or roll their own. Each of these decisions has its own tradeoffs for both the long and short term.
Apart from TCO, there are two aspects to choosing a technology – the technology itself, and the paradigm it represents. You can invest in Technology X, which is part of Paradigm Y. For example, on-premises Hadoop (Technology X) in the early 2010’s was part of the new Big Data movement (Paradigm Y). If you heavily invested in on-premises Hadoop in 2010, you probably felt like this was a smart move. Fast forward to 2020, the terms “on-premises” and “Hadoop” both seem very antiquated. Since 2010, the world has moved into the cloud, and there are many excellent alternatives to Hadoop. Meanwhile, your data team dedicates significant time and bandwidth to supporting the existing system. You likely have little time or energy to consider replatforming to a modern solution.
Total opportunity cost of ownership (TOCO) is the cost of being captive to Technology X and Paradigm Y, while no longer benefiting from new Technologies and Platforms. It’s the price you pay by going all in on Technology X and Paradigm Y, and not being able to make the transition to new paradigms. Jeff Bezos urges people to opt for decisions with “two way doors”, meaning you can reverse course or take another direction. Lowering your TOCO allows you to move fast, experiment, and introduce new technologies and paradigms that can greatly improve your business.
Here are some suggestions to lower your TOCO.
- Avoid religious attachments to a particular technology or paradigm. Things change fast. As sure as the sun sets and rises, so will your favorite technology or paradigm eventually be obsolete.
- Separate compute and storage. Keep your data in object storage like AWS S3, Azure Blob Storage, or Google Cloud Cloud Storage.
- Use containers. This allows portability of your code between platforms and clouds.
- Focus on core competencies and avoid undifferentiated heavy lifting. Invest in managed services whenever possible. Free up your time to invest in things that move the needle for your organization.
- Keep learning. Always be on the lookout for better ways of doing things.
Technology and paradigms change at light speed. Keep your options open.