Open Insights 10 – Do You Arbitrage?

Heavyweight Internet Group Newsletter
Issue 10 – Do You Arbitrage?
August 1, 2005

by Sean Hull

Founder and Senior Consultant

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Do You Arbitrage?

While traveling in Europe on business for the last couple of

weeks, I’ve been devouring Tom Friedman’s book The Lexus and the Olive Tree.  It’s subtitled “Understanding Globalization” but could have

just as well been “keeping up with the rush of technological change”.  Wha

tever your opinions on globalization & outsourcing, these forces of change,

along with disruptive technologies like the Internet and VOIP are flattening the

world and making it smaller and faster.  This both helps busines

s in providing a more efficient field on which to play, but also makes it more c

ompetitive as well.

In particular he discussed Arbitrage, that branch of finance about

profiting from disparities of information about markets.  Having

information or knowledge that some group of people or businesses don’t have isn

‘t enough, finding a way to put it to use helping people, that’s the tough part.

As technological change accelerates this becomes more and mo

re relevant in IT.  For example, companies are taking advantage of new tech

nologies such as Voice over IP to completely sidestep the traditional telephony

providers and saving a killing in the process.  Om Malik, the aut

hor of Broadbandits, discusses the rise of VOIP in this seminal blog entry

The Voice Over IP Insurrection.

Or take the example of Cendant Travel who has managed to save a bundle on an upgrage of their Orbitz and airline travel system by choosing not to go with a mainframe solution, but rather a 144 server Linux solution.
Of course these are two success stories, and just as with financial arbitrage, in

formation arbitrage can be risky.  Finding other businesses that can portray the trials and tribulations,  along with plenty of research, and testing

are crucial to avoiding a big waste of money.

Good consulting is all about this type of information arbitrage.  Knowledge of one area of IT is not enough.  You need experience with Operating Systems from Windows to Linux, MacOS to HP-UX.  You need a touch

of networking knowledge, and a good head about security.  And you need to have a sense of what troubles end users really struggle with.  On the other

hand you also need to juggle different disciplines, which gives you a very broa

d view of the business.  One day you are thinking about a proposal, and fra

ming and pricing that fits the clients budget.  The next day you are thinki

ng about technical problems and how to solve them within that structure you’ve p

ut together.  You’re thinking about promises, and timelines but also releva

nce and context.  There is always a bigger problem to  solve, always a

complex way to look at a problem.  The trick is often distilling a problem

down to it’s essence and focusing on that to bring out the solution as efficien

tly as possible.  And the truth is sometimes you make guesses.  Based

on all your years of experience, and diversity of encounters with problems at clients in various industries, you use your gut feeling to eliminate and focus on

the  relevant.  Of course there is plenty of science, and investigation, but the  efficiency is often a function of such intangibles.

Good consulting though is also about the story telling.  It is the non-technical side, conveying, distilling, and making analogies.  Information such as this helps business management make the right decisions based on budget, short and long-term expectations, and customer needs.

Consider all of these factors the next time you weigh and delibe

rate over outside resources for a project.  Although fixed fee projects sho

uld be fairly easy  to compare assuming you’ve spec’d out the bounds well,

hourly billing can be very misleading, a comparison of apples and oranges.

Also consider a wider net of  experience than just the particular need of

the moment.  Security vulnerabilities, or efficiencies of other components

of your infrastructure may be discovered, getting more for your money.

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Migrating a MySQL Database to Oracle