[kictanet] Expensive software systems?

Wed Jun 25 21:55:23 EAT 2008

Wesley,

Actually given the right parameters, even ERP-like software can be locally developed. The two closest examples of ERP-like systems I have come across that were 'locally' developed were: a system by Haron Wachira (he formerly of Diamond Systems - the 1st Kenyan firm to assemble computers) which I remember being used by a major Tea company through its network, among others, and Rwanda's SmartGov. There is a very thin line between these systems and conventional ERPs. 

Btw, before I even thought that 'hardware' manufacture/assembly is a pipe-dream for us - until I came across the 'fabless trend' that Nigeria is already pushing. It is truly cutting-edge technology - and 'knowledge work'. For those who might not know, in such a scenario, a country/firm that does not have the technology to 'manufacture' chips/VLSI can still design systems, and then send designs to places like Malaysia for production/manufacture of the chips. The 'intelligence' or brain-work (and hence the money) is not in the manufacture, but in the design, particularly for products whose value is in the uniqueness/complexity, not numbers.

In effect, if the environment is right, it is doable.
Shem
--- On Wed, 6/25/08, wesley kiriinya <kiriinya2000 at yahoo.com> wrote:

From: wesley kiriinya <kiriinya2000 at yahoo.com>
Subject: Re: [kictanet] Expensive software systems?
To: "Shem Ochuodho" <shemochuodho at yahoo.com>
Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
Date: Wednesday, June 25, 2008, 12:55 PM

The kind of software I'm refering to is not on the rank of SAP and Oracle. These are software built to use SAP, Oracle or other larger scale software. So let me break it down:

1. Level 1 Software: Operating systems, SAP, Oracle, MS SQL, ...: I don't propose that these can be done locally.
2. Level 2 Software: Software that integrates with the above. Usually shipped as libraries. It's sort of middle level software: This requires good skill and can be done locally on some scale. Infact it should be encouraged that it be done locally.
3. Level 3 Software: What the client actually interacts with. They can also be software utilities. They interact with the Level 2 Software: Can be done locally. This is probably the work outsourced to countries with cheapest labour that can do the work.

--- On Wed, 6/25/08, Leonard Mware <mleonardo at yahoo.com> wrote:

From: Leonard Mware <mleonardo at yahoo.com>
Subject: Re: [kictanet] Expensive software systems?
To: kiriinya2000 at yahoo.com
Cc: "New Vision List" <newvisionkenya at yahoogroups.com>, "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
Date: Wednesday, June 25, 2008, 4:40 PM

I have two questions: 
1. Do we have locally done large scale ERPs in the market that compares with SAP, Navision, BAAN, Oracle Financials?
2. How well tested are they? For such a large and mission critical system testing skills and the cost of testing is critical on final cost.

Leonard

Shem Ochuodho <shemochuodho at yahoo.com> wrote:

Wesley & Washington,

Very legitimate points raised.

Allow me to share a real life experience. While at KPC, we came across two very interesting scenarios. When developing the Corporate ICT Strategy, we shopped around and gathered that possibly only 2 other 'Class A' parastatals and a handful of large private corporations had developed their ICT strategies. In a number of cases for multi-nationals, their strategies had largely been developed from parent organizations overseas. For the 2 local firms (and 1 large MNC), they had spent about KShs 300m to develop their strategies. In the case of KPC, it was done by locals (Kenyans), and it cost in total just under KShs 15m (10m to 'experts' + overheads + taxes).

Yet for those who may be in the know, at the time (2004/05), the KPC ICT Strategy was like an ad-hoc standard (the way the Rwandan ICT Masterplan is to some!). Not only did a number of other strategic parastatals go the same route/or borrow an idea or two from it; at the time, some sections of COMESA and NEPAD were considering it for a 'regional template'. Am not belabouring on this to show how excellent it was, but to give comfort that it was as good - if not better - than those which were developed at 20x its cost - and by locals.

At inception, we had a dilemma because we would not have found any local experts with experience in this sector - since KPC was/is perhaps the only refined petroleum pipeline company in the region - so to find 'local experts' who had developed similar strategies was almost out of question. However, Management & Board recognized that there were discrete skills which could be put together to get something close to the desired whole/ideal: there were people who had developed strategies for large corporations (public and/or private), oil companies (the distributors), energy companies (e.g. SCADA is a backbone to all large-scale energy 'transporters', including KPC and KP&LC), etc. So, we went out looking for what at the time were considered to be some of the best within Govt, industry (private sector), academia, and civil society (in this case not the NGO Council, but professional associations), etc. In all, we ended up with a team of 15, some of them
 subscribers on this list. And they did a fantastic job.

Scenario 2: just as the team was winding down, the SCADA system broke down. This wasn't the first time for the system to go done; it had done so a few times before. From info available, whenever this had happened before, we had to turn to a major international firm in this sector domiciled in Canada. Firstly, they would take at least two weeks to arrive to work on the problem. Secondly, every time they came the Corporation would pay KShs 10m minimum, minus overheads (air-fare, hotel accommodation, etc). In this instance, when the ICT-Strategy team was asked if they could work on it, 3 among them came forward to do so. Within 4 days, yes 4 days, the system was up and running, and it cost the Corporation only KShs 700k (inclusive of overheads)! Apart from the money and time saving, we had enabled ¡technology transfer/acquisition¢, and if need be, in future, there was local expertise that would be called upon.

In a nutshell, I wouldn't be surprised if we spent 20x more on ICT products and services than is really necessary - especially for the ultra-large projects. ICT development and promotion is not only attractive in the wealth, jobs, efficiency and productivity it creates, but also in the expenses/costs it saves. Would be interesting to know how much as a country we spend to 'import technology' versus what we would need to spend on developing skills that would help us avoid importing some (of course not all) those technologies.

Best rgrds,
Shem
--- On Wed, 6/25/08, Odhiambo Washington <odhiambo at gmail.com> wrote:

From: Odhiambo Washington <odhiambo at gmail.com>
Subject: Re: [kictanet] Expensive software systems?
To: "Shem Ochuodho" <shemochuodho at yahoo.com>
Cc: "KICTAnet ICT Policy Discussions" <kictanet at lists.kictanet.or.ke>
Date: Wednesday, June 25, 2008, 4:20 AM

On Wed, Jun 25, 2008 at 9:56 AM, wesley kiriinya <kiriinya2000 at yahoo.com>  wrote:  > Ladies and Gentlemen,  >  > How come most of the software systems Kenya gvnmt and related bodies  > purchase always cost 100s of millions if not a few billions?  > Like this one for KPA:  >  http://www.bdafrica.com/index.php?option=com_content&task=view&id=8383&Itemid=5860  >  > This is not meant to hit anyone hard. I'm trying to see whether there  is a  > better solution. 
 >  > So far this
 year I've heard of 3 systems:  > 1. KRA  > 2. Immigration  > 3. KPA.  >  > This KPA system costs a total of 450M, but the software bit is 200M. From  > the software features described I feel they could have got better value  for  > their money.  >  > May be these systems really cost that much. May be there is someone in the  > list who can shed more light on these systems.  >  > BTW: To make this even more interesting various developers in the list can  > suggest a software solution component for each problem these systems  solve,  > estimated development time and estimated cost. That way it's not just  > talking the talk but walking the walk.  >  > I'll take a shot:  > Case 1:  > From the newspaper article, one of the port guys is quoted as saying:  > "One unique thing about the system is its capacity to capture data in  real  > time. The moment a vehicle rolls
 out of a vessel, its data is captured.  This 
 > makes it easier for us to track such cargo and containers as well,"  said  > Osero.  >  > My take:  > Analysis: The machines which are costing 250M (It's 250M machines +  200M  > software = 450M entire system) have sensors that measure different  > qualities/properties of the item in the machine e.g. weight. These  machines  > have an API to link them to a computer system. Using the API get the  > measured quantity and display/store in database etc. This isn't really  the  > hardest thing to do as the manufactures of the 250M machines should  provide  > documentation and support to the software developers.  >  > Estimated work force and time: 3 developers, 3-4 months.  >  > Cost: 200K * 3 developers * 4 months = 2.4M. + 20% (any other expenses) =  > 2.88M.  >  > Case 2:  > Another feature is keeping track/audit trails/ historical data.  > 
 > My take:  > Analysis: This is basically from:  > 1. Collection
 of good requirements from the port.  > 2. Designing the right architecture that fits the requirements.  > 3. Creating the right designs from the architecture.  > 4. Pass the designs to the programmers for implementation.  >  > 1-3 are Key and this is where the bulk of the money will go.  >  > Estimated work force and time: 3 system requirements/analysis collectors,  4  > months. The actual time depends on how well KPA know the problems they are  > facing, and how well they can describe them.  >                                               3 system/software  architects,  > 3 months.  >                                               4 system/software designers,  5  > months.  >  > Cost: (Requirements) 100K * 3 * 4 = 1.2M+20% = 1.44M  >     (Architecture) 350K * 3 * 3 = 3.15M+20% = 3.78M  >     (Design) 250K * 4 * 5 = 5M+20% =
 6M.  >  > So far the total is 14.1 M. And these are some of the most important  roles.  >
 Even with 15 programmers @ 100K for 12 months (+20%) = 21.6M for a current  > toral of 35.7M.  >  > OK I'll stop there. I'm not writting a report. Feel free to  correct me. I  > could be very wrong.    Hello Kiriinya,    This is a very interesting analysis and I'm compelled to agree with  you as regards the cost factors. However, the implementation process  doesn't seem to be that straight, and might not be for some time. Hey,  I am not being the govt spokesman on these matters but nothing is so  secret about it.  I do believe that tenders were invited for such implementations but I  don't know the details. I am only assuming it's the norm. If any  studies were carried out regarding the system requirements, then only  the IT Directors within those organizations can tell. Perhaps it's  time such information is made public via some govt
 publication (those  organizations are parastatals). I am not familiar with govt  procurement procedures but the last time I read
 anything about it, it  was a whole lot of a mess so you don't expect to see any level of  transparency in that. Those are some of the things the coalition govt  is supposed to be addressing, IIRC.  But even if you expressed interest in undertake such a project, I  wonder how much the organizations would be willing to let you in on  their operations. So the first question is: Did they give the  organization that won the tender the access into their operations in  order to understand their needs? I don't think so. Perhaps they just  "borrowed" from an organization that had done it for someone else and  customized! In such a case, no one cares to do the calculations as you  have done. They simply get a quote, "negotiate" and buy.  I believe this explains why the costs are as high as they are.        --   Best regards, 
 Odhiambo WASHINGTON,  Nairobi,KE  +254733744121/+254722743223  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _    "Oh My God! They killed init! You Bastards!" 
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