Tag Archives: TCO
Modern Software Engineering Practices and TCO

Before we get directly into Total Cost of Ownership questions, I’d like to give a little background on how I approach this topic. I’m a student of the Theory of Constraints. I’m no expert, but I have a working knowledge of the concepts and how to apply them in Software.

Theory of Constraints (ToC)

The Theory of Constraints is a deep topic. If you’re not familiar with it, I encourage you to read “The Goal,” “The Phoenix Project,” and “The Unicorn Project” as primers. These are all fiction novels that do a fantastic job bringing abstract ideas into concrete reality in a way that’s easy to grasp.

The aspect of the ToC I want to focus on now is the attitude toward inventory and operating expense. When you invest in inventory, you are committing funds that are “frozen” until the end-product is sold. Inventory and Operating Expense detract from the realization of value, i.e., profit. Many managers focus their effort on reducing inventory and operating expense as a way to increase profit. There’s no intrinsic problem with this approach, but it does have some limitations.

First, you need some inventory and some operating expense in order to produce value. This means that the theoretical limit to how much you can reduce inventory and operating expense approaches but can never reach zero. At some point, you will have done all you can.

In ToC, while you are encouraged to reduce inventory an operating expense where it makes sense, this is less important than increasing throughput. If you can produce more quality product faster but incur some minor increase in inventory and operating expense, it’s worth it to do it. ToC’ers are careful to remind you though that local optimizations (e.g, optimizing just one step in the production process) are irrelevant. What matters more is that you can move value through the entire value stream and realize the value as quickly as possible.

ToC in Software

In software engineering, inventory is your backlog. The realization of value is when the software is used. Everything in between is operating expense. The golden metric in software engineering is lead time–the time it takes to deliver a feature from the moment it’s started.

Aside: I have found it helpful to track the delivery time from the moment it's requested (ordered) as well as the time from the moment an engineer starts working on the story. This helps separate engineering bottlenecks from project management bottlenecks.

The activity of software engineering is aimed at delivering value through features. Repairing defects does not add value. They are work that has already been paid for so the repair effort is a net loss to feature delivery. They consume valuable resources (developer time) without adding new value (features).

Three Approaches to Functional Quality

In software delivery, the biggest bottleneck is usually in the testing phase. As it stands, it’s also the phase that most often gets cut. The result is low-quality systems.

In software construction, there are only three approaches to functional quality.

  1. Production “Testing”. Unfortunately, I’ve worked for some companies that do this. They have no QA and no internal quality gates or metrics. They throw their stuff out there and let the users find the bugs. Even some “Agile” shops do this since it’s easier to teach people how to move post-it notes across whiteboards than it is to teach them how to engineer well.
  2. Manual Testing. This is much more common. In the worst case, developers write code and pass it through “works on my machine” certification. In the best case companies hire Testers who are integrated with the team. The testers have written test cases that they traverse for each release.
  3. Automated Testing. This approach is much less common than I would like. In this model, developers write testing programs along with the code they are developing. These tests are run every time changes are committed to check for regressions. The defects slip through, the fixes are captured with additional automated tests so that they don’t recur.

If you are testing in production, you don’t care about quality. Your users will likely care and you are not likely to keep them. Almost everyone understands that this is not an ideal way to proceed. Most people rely on manual testing. Some have some supplemental automated testing. Few have fully reliable automated test suites.

Manual Testing

Many companies rely mostly on manual testing. In a purist’s world, all test cases are executed for every release. Since manual testing–even for small systems–is necessarily time-consuming, most companies do some version of targeted manual testing–targeting the feature that had changes. Of course, defects still slip through, often in the places that weren’t tested because the test cases weren’t considered relevant to the change. What I want to bring your attention to here is not the impact on quality but on lead time.

In this model, when the dev work is done (it’s “dev-complete”), it gets handed off to some QA personnel for manual testing. This person may or may not be on the same team, but it’s irrelevant for our purposes. This person has to get a test environment, setup the software, and march through their manual test cases. This cannot be done in seconds or minutes. In the best case scenario, it takes hours. In reality, it’s usually days. If failures are found the work is sent back to engineering and then process is repeated.

Due to the need to occasionally deploy emergency fixes, there has to be some defined alternative approach to getting changes out that is faster and has less quality gates. Many companies require management and/or compliance approval to use these non-standard processes. Hotfixes themselves have been known to cause outages due to unforeseen consequences of the change that would normally be captured by QA.

Automated Testing, Continuous Integration, and Continuous Deployment

In contrast to the manual testing approach, automated testing facilitates rapid deployment. The majority of use-cases are covered by test programs that run on every change. The goal is to define the testing pipeline in such a way that passing it is a good enough indicator of quality that the release should not be held up.

In this model, branches are short-lived and made ready to release as quickly as possible. The test cases are executed by a machine which takes orders of magnitude less time than a human being. Once the changes have passed the automated quality gates, they are immediately deployed to production, realizing the value for the business.

When done well, this process takes minutes. Even with human approval requirements, I’ve had lead times of less than an hour to get changes released to production.

The capabilities that these processes enable are enormous. Lead times go way down which means higher feature throughput for our engineering teams. We are able to respond to production events more quickly which increases agility not only for our engineering teams but also for our businesses. We have fewer defects which means even more time to dedicate to features.


Many engineers think of DevOps as automating deployments. That’s certainly part of it, but not all. DevOps is about integrating your ops and dev teams along the vertical slices. Software construction should be heavily influenced by operational concerns. If the software is not running, then we are not realizing value from it. Again, the ToC mindset is helpful here.

Software construction should include proper attention to logging, telemetry, architecture, security, resiliency, and tracing. Automating the deployments allows for quickly fine-tuning these concerns based on the team’s experience running the service in production.

Deployment automation is a good first step and helps with feature-delivery lead times right away. Let’s think about some other common sources of production service failure:

  1. Running out of disk space.
  2. Passwords changed.
  3. Network difficulties.
  4. Overloaded CPU.
  5. Memory overload.
  6. Etc…

A good DevOps/SRE solution would monitor for these (and other) situations and alert engineers before they take down the service. In the worst case, they would contain detailed information about the problem and what to do to address it. This reduces downtime for the service and allows you to restore service faster in the case of an outage. From a ToC perspective, both outcomes increase the time you are realizing value from the software.

So Why Are Modern Engineering Practices Still Relatively Rare in our Industry?

I’ve been trying to answer this question for 17 years. I think I finally have a handle on it.

Remember that it’s common to attempt to increase profit by reducing operating expense. Automated testing and deployment requires a fair amount of expertise and a not-small amount of time to setup and do well. They are not often regarded as “features” even though the capability of rapid, confident change certainly is. These efforts begin as a significant increase in operating expense, especially if it’s being introduced into a brown-field project for the first time.

Aside: It can be hard to convince managers that we should spend time cleaning up technical debt. It's harder to convince them later that failing to clean up technical debt is the reason it takes so long to change the text in an email template. Managers want the ability to change software quickly, but they don't always understand the technical requirements to do that. Treating lead time like a first-class feature and treating defects as demerits to productivity can help create a common language between stakeholders about where it's important to spend engineering time. If you can measure lead time, you can show your team getting more responsive to requests and delivering faster.

The cost of getting started with modern engineering practices is even bigger than it first appears. It is not possible to build fast, reliable automated tests without learning a range of new software engineering principles, patterns, and practices. These include but are not limited to Test Driven Development, Continuous Integration, Continuous Deployment, Design Patterns, Architectural Patterns, Observability patterns, etc.. Many software engineers and managers alike balk at this challenge, not seeing what lies on the other side. Most engineers will slow down when learning how to practice these things well since the patterns are unfamiliar and the tendency toward old habits is strong. Many will declare automated testing a waste of time since it doesn’t work well with what they’ve always done. The idea that they may have to change the way they develop is alien to them and not seriously considered. The promise is increased productivity, but the initial reality is the opposite– a near work-stoppage. This is true unless you are working with engineers who’ve already climbed these learning curves.

Engineers will describe it as “this takes too long.” Managers will be frustrated by the delays to their features. In business terms, this is seen as increased operating expense and lower throughput–the opposite of what we want. We are inclined as an industry to abandon the effort. We feel justified in doing so based on the initial evidence.

This is a mistake.

Square or Round Wheels? | Steen Schledermann's Blog

All of these costs are mitigated enormously if these efforts are done at the beginning of the project. Very often companies will create mountains of technical debt in the name of “moving fast.” These companies will pay an enormous cost when it’s time to harden their software engineering and delivery chops. The irony is that the point of modern engineering practices is to facilitate going fast, so this argument should be viewed skeptically. There are cases when this tradeoff is warranted, to be sure, but it is my opinion that this is less often than is commonly believed.

Getting Through the Learning Dip

We must remember that we’re not as unique as we think we are. Learning new ways of operating is hard. We can look to the experience of other enterprises to remind us why we’re doing this. It’s clear from the data that companies that embrace modern engineering practices dramatically reduce their lead times and the total cost of ownership of their software assets. If we want to compete with them we must be willing to climb this initial learning curve.

The frustration and anxiety we feel when we take on these challenges is so normal it has a name: “The Learning Dip.” We must recognize that this is where we are and keep going! It’s important not to abandon the effort. For those who like to be “data driven,” tracking lead time will be helpful. For project managers, treating defects as a negative to productivity will also help drive the right attention to quality. Again, time spent fixing bugs is time not spent building out new features. Defects as a percentage of your backlog is something you can measure and show to indicate progress to your stakeholders.

I once managed a team that did one release every 5-6 weeks. After investing heavily in this learning, we were able to release three times in one week. It was a big moment for us and represented enormous progress, but the goal was to be able to release on-demand. We celebrated, but we were not satisfied. The overall health of our service began climbing rapidly according to metrics chosen by our business stakeholders. More than one of the engineers told me later that “I will never go back to working any other way.” They haven’t.

As engineers, even the most experienced people must be willing to adopt a learner’s stance (or “growth mindset”). We must change our design habits to enable automated testing and delivery. We must learn to care about the operational experience of our software and about getting our features into production as fast as possible without defects. Any regular friction we encounter during the testing and deployment process should be met with aggressive action to fix and/or automate away the pain.

As managers, we must set the expectation that our engineers will learn and practice all of the modern software engineering techniques. This includes TDD, CI, CD, DevOps, and SRE concepts. We must make time for them to do so and protect that time.

If we are concerned about the initial impact to our timelines, we can hire engineers who already have this expertise to help guide the effort. It is not necessary that every engineer has the expertise already, but it is necessary that those who have it can teach it to the others and those who don’t are actively engaged in learning. This will dramatically reduce time spent in The Learning Dip in the early stages of rewiring how our teams think about their solutions. If we can’t afford to hire FTE’s for this role, perhaps we can find budget to hire experienced consultants to work with us and get us through the slump.


Modern Engineering Practices do represent a significant initial expense for teams just learning how to employ them. However, this initial expense enables a force multiplicative effect on feature delivery. In other words, it’s true that these techniques cost more–at least initially. It’s also true that they reduce the TCO of your software assets over the long-term. They speed up your engineering teams’ and business’ ability to react to the marketplace. A little more expense up front will save you a lot more down the road. As Uncle Bob says, “the only way to go fast is to go well.”

Go well and be awesome.