The BIG stretch: Software and flexing your firm's size

A mathematician (a Fields Medal winner, so a real one) once asked an economist whether there was anything in economics that was non-obvious and non-trivial. Well, the answer that came back was: "It's all obvious or trivial except Ricardo on comparative advantage." So, once explained, this analogy is both obvious and trivial, …

[All names Taken]

The question(s) is(are)

Should reality do what the model predicts?

Or should the model predict what reality does?

In either case add a bit of Bayesian analysis (all hail to forward planners everywhere?) and of course the next favorite craze of tomorrow will never, ever be predicted or expected?

[James 51]

There's one thing you missed out and that's the insanity/stupidity/ignorance/incompetence/malevolence of those who can stay awake.

[thames]

"enterprise software is there to ..."

I would say it's there to do for the office what machinery does for the factory floor. It's a form of automation. The problem is that a lot of it is just very badly done. Failed machines get fixed or scrapped. Failed ERP systems live on forever bleeding away time, money, and the will to live.

I think the big problem with enterprise software is the lack of tangible and measurable benefits in most cases. You know if a new factory machine has saved labour on a production line. You just have to count the number or workers and compare that to output. ERP and CRM systems often seem to get installed with no clear goals or way of measuring the result.

As for the size of firms, the reason why the largest companies tend to be the big customers for "enterprise" software is that the benefit of this software is often so small that you need large economies of bureaucratic scale to see any net benefit from the up-front cost of implementation and the ongoing license fees. When someone figures out how to do this sort of thing quickly and cheaply, we'll see it filter down more to smaller businesses.

[bell]

Other software, other bounds moved?

Very nice idea. Surely it's only part of the story though.

Is there not another set of software ("enterprise" being such a dismal adjective or classification anyway) which increases the practical size or complexity of a network of ad-hoc contracts? Or do all the real, perceived and just fervently hoped for impacts of software make firms more likely to be the optimal structure?

[Tim Worstal]

Re: Other software, other bounds moved?

Obviously only part of the story. But then that's true of any economic policy, theory or even analogy. The world's a complicated place and we can only explain certain aspects of it with any one policy, theory or analogy.

[billat29]

Nice one Tim?

Good opportunity for TW to cut and paste some economics guff into the Reg under the guise of a tenuous link to enterprise software.

Organisations buy so-called enterprise systems because

1) All their competitors have one

2) The systems they have are old and crufty and they want a change.

3) New kid on the block wants to make a name for themselves

Oh and you CAN fall asleep in meetings. It's all sorted out in the pre-meeting meeting. Didn't you know?