It´s an accounting issue (3 + 4)

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Agreement Language

There are several issues that must be considered around agreement language that can impact how the revenue is reported.

• Gross versus Net Revenue reporting: Service provider costs, related party transactions and alliance agreements.
• Pricing structure and embedded leases

Compliance and Controls

Compliance and control is important since it offers assurances to investors and more often than not, it is the law.

Points and Reminders:
• Clients and service providers need their accounting experts to sign off on any accounting treatments.
• Every contract can be different; slight nuances to contract language can alter accounting treatments.
• Recognizing and addressing these issues upfront, in the client’s sourcing strategy, improves their RFP and negotiation position.
• Everyone benefits from a clearly defined strategy.

And one last parting thought, “It’s an Accounting Issue.  No, it’s a Contract Issue.”

Complexity

Recently I came along Johnnie Moore´s post in which he comments on a presentation that Dave Snowden held in Singapore on “Complexity in Government“.

And I agree that in slides and podcast there is serious food for thought.

One quick takeaway:

In nature, stability and resilience are opposed. A stable system lacks resilience and a resilient systems lacks stability. So it’s ok to stabilise things if you’ve got certainty of future; if you’ve got uncertainty you can’t afford stability you’ve actually got to introduce inefficiency.. if you don’t have a degree of inefficiency in the system it loses its evolutionary potential.

It´s an accounting issue (2)

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Start-up & Transition and Asset Ownership

…

several issues that need to be considered around start-up & transition and asset ownership including:

• Asset ownership:  Asset valuations, Lease Types
• Start-up, Transition, Transformation and One-Time Charges: Expensed vs Capitalization
• Restructuring costs

Insurance against project failure

for Vendors. Pete Swabey on InformationAdvantage explains:

The number of IT projects that end in failure is staggering. According to a 2007 study by researcher Market Dynamics, 62% of all IT projects miss their deadlines, 49% go over budget and 41% fail to deliver the benefits that were expected. That is worrying enough for IT departments.

But for consultants and software vendors, keenly aware that project failure could well result in litigation, it is a constant concern. It is that concern that specialist insurer Hiscox addresses with its offering to IT vendors, insuring them against being sued by their customers. And it is a genuine danger. Stephen Wares, UK manager of Hiscox’s IT practice, tells of a small software development company with a turnover of £5 million that was sued for £18 million for the alleged failure of a project (the suit was eventually unsuccessful).

And the reasons he tells about are so well-know: bad specifications, overselling in the sales pitch, lax or non-existent change management.

The Dark Side of Cloud Computing

cio.com:

Companies tapping into virtual infrastructure through cloud computing should take another look at their security plans, say experts at the Black Hat Security Conference. From legal protection to phishing, here are five cloud security issues to consider.

Here are they:

1. Cloud offers less legal protection
2. You don’t own the hardware
3. Strong policies and user education required
4. Don’t trust machine instances
5. Rethink your assumptions

Interesting slides from the recent Black Hat conference here. Unfortunately the paper is missing, but probably need just a recheck next week here (or see for Haroon Meer under the speaker on the right side here.

The Arduino has landed…

I admit it, I am too curious to pass the opportunity to play with another gadget.

Today has a Arduino landed, fast shipped from Watterod. What a nice toy.

Some link for those that ask themselves “what the hell is an Arduino”.

The projects homepage: www.arduino.cc

Good books on Arduino from O´Reilly:

German c´t had an article recently and as a nice page with a hell of links.

Ideas for dozens answers the question “Why the Arduino Matters“, and yes, this could be true.

Jan-Piet Mens has created a monitor for Nagios and Icinga, the Naguino.

An interesting project is TinkerKit, an Arduino-compatible physical computing prototyping toolkit aimed at design professionals. Still under development, but very interesting.

And finally, O´Reilly has also a book on Arduino in german:

It´s an accounting issue…

John Klee from TPI starts a series of posts on Accounting Considerations in Sourcing Environments. This is going to be interesting:

What accounting issues can impact the Sourcing strategy and/or RFP structure?

• Asset ownership:  asset valuations, embedded leases in service contracts, lease capitalization
• Start-up, transition and one time charges:  expensed vs. capitalization
• Potential alliance agreements:  Related party transactions, gross vs. net revenue recognition
• Regulatory compliance:  Sarbanes-Oxley Act, SAS70, etc
• Pricing structure:  service provider revenue recognition
  • After collecting cash, recognizing the revenue streams related to those collections is often a Service providers management’s greatest concern

Interesting thoughts on Software pricing

Jett Atwood on CodingHorror: Software Pricing: Are We Doing It Wrong?

Worth a reading, and interesting insight. Once you have covered the production cost for software, you just need to cover the distribution cost if you distribute electronically. Then a low pricepoint could lead to significant higher sales in total.

Closed platforms are like ice cubes in a glass of water

Closed platforms are like ice cubes in a glass of water. They float for a while. They change the temperature of the liquid. Ultimately however, the ice cube eventually melts into the wider web.

Jean-Marc Liotier in a comment to an worth reading article in the LA Times about Twitter (which is down at the moment…)

(via)

Clouds on a sunny and hot day

eweek.com:  Informatica Launches Data Integration Service in the Cloud

Interesting:

PowerCenter Cloud Edition, which became available on July 23, uses Amazon EC2, Amazon SimpleDB and Amazon S3 (storage) to provide access to enterprise data sources such as relational databases, flat files and SAAS (software-as-a-service)applications.

Bruce Cleveland: The SaaS Business Model and Some Common Legal Questions – worth a read. I believe these kind of issues is way underestimated.

David Linthicum: Will Cloud Computing kill the Datacenter?

Probably not. While cloud computing is a great fit for some applications, and/or other architectural components, it typically won’t be a fit for all applications and/or architectural components. There will always be some data, services, processes, and complete applications that you want to keep within your firewall for a number of reasons, including: Compliance, privacy, fear, control, and cost.

Brian Sommer: Is Your IT Shop Mature Enough for Cloud Computing?

CIOs will need to marry their needs and business requirements with the true capabilities of cloud capability providers. I suspect that some providers offer a cloud ‘space’ and not much else. CIOs will likely need more. They’ll want to work with providers that can advise them on needed capabilities in their application portfolio, changes they’ll need to make in their applications, techniques and technologies required to make cloud apps integrate with legacy apps, etc. If a cloud provider just offers bandwidth and disk storage, their solution may be woefully inadequate.

Yes, that´s what it boils down to. Just the “cloud space” is not that a big step from managed hosting of individual servers.

Joe McKendrick: Do we need cloud oriented architecture?

Absolutely. More than ever, as environments get quite complex if a multitude of services, both external with multiple providers plus internal retained have to be integrated.

He is linking to a post from ZAPLinks Ronald Schmelzer: Who’s Architecting the Cloud?

The essence:

Given that too few cloud computing providers have your business in mind when they architect their solutions, and the ones that have a process-specific business model and approach aren’t concerned with your specific business, it lands upon the laps of enterprise architects within the organization to plan, manage, and govern their own architecture. Once again, the refrain is that SOA is not something you buy, but something you do. Perhaps we can start hearing the same mantra with cloud computing? Or will the cloud succumb to the same short-sighted, market pressure that doomed the ASP model and still plagues SaaS approaches? It’s not up to vendors to answer this question. It’s up to you… the enterprise architect. There are no short-cuts to EA.

Amen.