Subject: Re: Fwd: Wall Street article on a new Cooperative
From: Adam Turoff <ziggy@panix.com>
Date: Mon, 19 Apr 2004 16:09:19 -0400

On Mon, Apr 19, 2004 at 12:19:35PM -0700, David Fetter wrote:
> On Mon, Apr 19, 2004 at 01:23:26PM -0400, L Jean Camp wrote:
> > Begin forwarded message:
> > >Avalanche Project Is Clearing the Path For Tech Cooperation
> > >April 12, 2004; Page B1
> > >
> > >Co-ops have been a fact of life inU.S. agriculture for decades,
> > >with farmers banding together to solve common problems. Now, a
> > >group of computer chiefs at some of America's biggest companies are
> > >trying to do the same thing with technology.
> 
> Is this supposed to be good news?  I don't believe that giant
> corporations do "co-ops" in the sense that small farmers do.  The real
> word for the practice is trusts, as in the Sherman Anti-Trust Act.

Actually, 'co-op' seems the most appropriate model to describe Avalanche.
I don't see how you can cast this model as a 'trust'.  If anything, it's
a bunch of non-tech companies 'unionizing' against the tech vendors that
call all of the shots.  (A rather ironic and perverse thought, that.)


As I understand it, it's about N companies coming together to split the
cost of developing, say, call-center software.  They each pony up 1/Nth
of the cost, rather each pay $X to a vendor for licenses.  The vendor
only spends $Y to develop the package, so the premise is that $Y/N is
much less than $X, even though $Y > $X.

That's appears to be the logic of it.  None of these systems are
line-of-business (which no one would share with any consortium).


Nevertheless, I question the value behind this co-op.  There are three
kinds of software non-tech companies buy/write:
  - line of business automation (trading systems)
  - ancilliary automation (HR, Benefits Management, call center, CRM)
  - general purpose (Windows, Apache)

Non-tech firms write a small amount of general purpose software, because
it has low ROI.  It does happen, like BestBuy's AppTalk, but I don't see
how paying $30K/year to pony up to the bar is a benefit for BestBuy or
for AppTalk, when they could release that software as open source, and
get more benefit for less money.

No one is going to turn their core business software to a consortium
"for anyone else to use, and possibly extend".  So that's a non-starter.

That leaves the ancillary stuff: HR, asset management, contact
management, CRM, etc.  Anything these non-tech companies write in house
is going to be heavily customized to their business models, and
inappropriate for anyone else to use -- even in the same sector.  
So the premise of sharing software is bogus from the start.


This announcement strikes me as a red herring, but a necessary one.

It's not so much about sharing software, as much as it is getting
companies to buy into the open source model.  Add in a $30K barrier to
entry to make the companies feel better and fund a centralized
organization, rather than going fully open source.  But once they buy
into the model, they can cooperatively develop (or fund) the ancilliary
packages they're going to buy anyway, but distribute the development
cost instead of paying a vendor to develop something shoddy and
overpriced.

Z.