Original

Earnback of service credits in technology service agreements is an absurd concept that should be rooted out of contracts

As often seen, service credits are commonly used in technology service agreements to compensate clients for a service provider’s failure to meet a committed level of service. Whilst service credit mechanisms can range from simple to byzantine, earnback of service credits is one of the more egregious pieces of nonsense you can see in a service level agreement.

To take a step back, there is a social concept that you can somehow repay your bad actions to society by doing good works. It is a form of utilitarian philosophical thinking where the greater good can outweigh the bad; perhaps industrialised in the sale of indulgences back in Medieval times. Conceptually, a murderer can go to prison for many years to “pay their debt to society”, but they still killed somebody, nevertheless. So, the concept is based on some possibly dubious principles and which does not always survive robust scrutiny. Indeed, as often is the case with socio-philosophical inventions like this, there are conditions under which the simple equations fail, and the answer they produce is nonsense.

As an aside, and I hesitate to bring it up, but if you want to test boundary conditions and how a rule, social or otherwise, works or doesn't work in extremis, then try applying the Jimmy Savile Test (OK, yuck).  If you don't know, Jimmy Savile was a uniformly horrible person who curried favour with rich and famous people in the high strata of society with his apparent "good works" as a cover for his obscene behavior.  
The test is this:  if somebody proposes a generic rule then you think to yourself "what about Jimmy Savile?", and if the answer is "Euw!", "No way!", "Disgusting!", then the rule is probably a bust.

Back to earnback, which in the context of a commercial service agreement, means the service provider doing some good works to overcome below par performance at some point in time. Those good works then exempt them from paying compensation to the client which would otherwise be payable for the poor performance. Timing-wise, the performance bump can be ex-ante where previous good works put money in the bank to credit against claims, or ex-post where the good works occur after the default. In the generality, it is all about the push and shove of risk transfer between client and service provider; earnback pushes back risk to the client.

As a principle, earnback of sorts could make sense for a development activity or manufacturing piecework process creating widgets where poor rate of production in one month can be offset by increased output in later months so that the same expected pile of widgets is created in the overall period, meeting the expected weighted average production rate.

However it makes little sense in an operating service where the service delivered is of its moment and the experience is transient. In the service world, a dog, as they say, is only as good as its last trick – not an average of its good and not so good tricks. Sometimes it makes even less sense…

Consider this typical earnback clause that you might find in a service agreement…

This says what it says which is that if the service provider behaves for three months following a service level default then they can play their “get out of jail free” card and not pay the service credit for their default. Graphically, it looks like this…

The story is: the service provider commits to deliver to a service level in the contract. They then default on that service level in Month N, and proceed to meet the service level in Months N+1 to N+3.

The earnback clause magically absolves them of paying for the default…by doing the job they are already being paid to do. This is patently absurd: why does doing that job same as any other time exempt them from paying the compensation? Thanks for nothing!

In the fetid atmosphere of the negotiating rooms when these types of clause were first invented (maybe the 1980s?) it probably all seemed to be a very clever manipulation of risk and incentives. You can see other examples of “cleverness” where complex mechanisms have been designed that don’t make sense in the cold light of today (e.g., service level escalator ratchets which don’t work in a multi-vendor SIAM setup).

In the hierarchy of performance metrics many of the older concepts like earnback of service credits fiddle in the bottom tier of technical performance measures whilst user experience burns: the client suffering an “All-Green Hell” SLA dashboard for a service that users hate passionately. Better to focus design efforts on performance regimes further up the pyramid…

So, root out earnback from your service agreements, let the service provider make its penance at the time of default and move on!

I’ve had a 30-year affair with pen computing technology, although good handwriting recognition has always eluded me. And now another generation of device comes along to tempt me…

I have always had a keen interest in pen computing (or even a passion, perhaps, in the modern way), all the way from the heady days of the first release of Windows for Pen Computing, 30 years ago. I’ve indulged myself over the years with various devices and the timeline looks like this…

You can see some patterns in the evolution of the technology across the years, with the pace of new device availability increasing in the past 5 or so years:

• the long development of Windows PC-based pen technology, from the first steps with the TriGem Pen386SX designed by Eden Group, through XP Tablet edition, to Windows 10 / 11, which actually mostly works as an integrated experience
• a cluster of “write-only” pen devices, the “write-only” characteristic making them mostly rubbish, although the Anoto-paper version of Filofax that came with the Nokia SU-1B was a lovely bit of leather
• some pen-enabled screens which offer the joy of scribbling on a virtual Whiteboard or shared PowerPoint whilst on a Teams call at my desk
• various Android tablets and E-Ink e-reader crossovers, always rather disappointing that they don’t do either job very well
• the nirvana of dedicated writing tablets, exemplified by the Remarkable Tablet and the now discontinued Sony Digital Paper

I actually visited Eden Group in their chapel in Rainow, Cheshire, back in ’92 and developed a small Visual Basic demo app (a doctor’s Ward Round) for their pen computer, which looked like this (courtesy of an archived edition of Byte Magazine):

It was pretty slow compared to modern standards with its mighty 20MHz Intel 386SX processor, 4MB of RAM and 4MB of flash memory, and some PCMCIA slots (hands up who remembers those), but it did work and ran the demo which looked cool (of course).

The thing that has always eluded me, however, is fulfillment of the promise of scrawling great thoughts with my pen; then having that transcribed into a perfect machine-readable digital rendering that you can then also file and search in some useful way.

The path to that destination has been rocky and unsatisfying. For example, the Nokia SU-1B had a transcription service that came with it. It was very poor: you wrote notes in the leather Filofax diary and the software turned those into complete garbage that it carefully wrote into the corresponding slots in your Outlook calendar. So sad.

Even the Remarkable, which is indeed remarkable, does a pretty average job of transcribing my handwriting. Although it is probably more of a case of “no, it’s not you, it’s me” due to my outstandingly bad calligraphy and poor penmanship. They tried to make me write better at school with handwriting lessons and a big fountain pen, but all to no avail, as it still looks like this…

The Remarkable makes a fist of transcribing that and comes out with this pithy screed…

Here is an example of my herd wily converted to hold the Remarkable tablet is vey goal as a paper replaced but is defeated my hard way when it comes to conversion to tend

As transcribed by Remarkable

To add some spice as I am writing this post, and as always to learn something new, I briefly tested the accuracy of some transcription systems using my handwriting sample, measuring the Word Error Rate (using Amberscript). The results are not encouraging…

Whilst Microsoft and Google managed to get about 75% of the words right and with Remarkable coming in third, the other solutions are just worse. So, for me, automated handwriting transcription is largely a pipedream.

In fact, by far the best system ever for recognizing my handwriting is Roger Hill V1.0. Over the years, Roger has painstakingly transcribed my rocket surgeon chicken scratch to create great looking PowerPoint pages, with a WER of probably 1%!

This is Roger, from his LinkedIn profile picture which has not updated since about 1997, I think…Kudos, Roger!

And so, now, to a taster of the new generation of colour e-reader/pen devices, the one in my hand is the Boox Nova Air C. The idea of a colour eReader / handwriting device is a major move on from the previous generation of monochrome renderings.

Obviously, you can get colour handwriting and drawing on a mainstream Android tablet like the Samsung Galaxy Tab, but the screen is too smooth and slippery and so the writing/drawing experience is not good. The Boox Nova Air C, like the other devices from the same maker combines a Wacom stylus, an Android 11 system and a Kaleido Plus colour screen (actually the colour is a layer on top of the monochrome eInk).

Sadly, the rather pastel colours are just underwhelming and really seem just a gimmick. Also, whilst the primary handwriting optimized apps give a good experience, the standard Android apps (like Office, etc.) have very laggy response to the pen which is not usable, and video is not a good idea on eInk. It could replace my Kindle Oasis that is losing its battery life, but it would not replace either the Remarkable or the Samsung Galaxy Tab.

Roll on Remarkable 3?

Technology cost optimisation has never been easy, but now there are devils lurking in the decisions driven by SaaS deployments…

Back in the day, the traditional layered structure was one of the organising principles for IT architecture, and was probably alright in the 90s…

That manifested in an IT application and hosting infrastructure mirroring the layering with data centres full of servers to host the apps and a veritable throng of IT Operations people to run it all…

In terms of cost optimisation, a key strategic enterprise consideration was in the tension between vertical specialization and horizontal standardization and cost consolidation, with some simple tradeoffs…

In this simple world, the dilemma was whether you allow business units have their heads and anything they want in the application space or standardize and consolidate applications and infrastructure to get the volume and standardisation benefits. Of course, the decision varied depending on the application types. For example, driving between specialised customer facing apps where the business might be beholden to the requirements needed to deliver best customer experience and competitive advantage. Contrasting with the back-office applications where there is no sense every business unit having a different finance or HR system; that complexity just creates non-value-adding cost, so standardization wins out. The “tin & iron” infrastructure was simple too, as it all ran in the company’s data-centres or perhaps in more exotic cases, in outsourced supplier’s locations.

So a simple life, with easy decisions…yeah…

But then SaaS came along and just busted out of the joint, breaking up the simple layered model and disturbing the simple inward-looking contemplations of the various decisions IT…

The consequence of the bust-out is a substantive reshaping of the enterprise technology landscape for many companies – turning the old layers sideways and abolishing some treasured assumptions. In doing so also the new enduring technology organisations that run that new shape (should) also get smaller since they no longer need to have the people to manage the “tin” (and, for those following the story above, the “iron”)…

The “hollowing-out” of the traditional IT infrastructure with separate SaaS services fragments the overall technology cost base, for example, by the separation and vertical integration of hosting costs into the individual SaaS towers. This pushes against some of more traditional levers of infrastructure standardization and creates some new tradeoffs to consider.

Architecturally speaking, under the covers, the actual composition of the SaaS towers is a heterogenous mixture of parts, albeit with some dominant patterns of deployment. SaaS vendors may host their own services, but often enough, they will use commodity IaaS cloud services, e.g., Genesys Cloud and Workday both run on AWS, as does Salesforce which also has self-hosted services. Equally in reverse, Microsoft who do host their own SaaS services, offer an on-premise Office Online Server for those organisations who need to embrace the data themselves, maybe for data residency/sovereignty/security reasons, but also want the reflection of Microsoft 365 online services in their lives.

This admixture of potential solutions creates a trilemma with many more tradeoffs to balance between the different dimensions of the service and cost optimization equation, thus…

So, it is a multi-dimensional problem to consider with the application architecture decisions having a considerable impact on the TCO of the resulting technology environment. Compared to the simple days of moving lots of ancient “tin” (and, of course, “iron”) to a shiny virtualized cloud infrastructure, moving to cloud (whether SaaS or IaaS/PaaS) is not these days a slam dunk guarantee of optimal costs; it depends very much on the transformation journey and where you are coming from and heading to, and how tightly managed that new place is.

To be sure, moving from a on-premises landscape with, for example, a multitudinous miscellany of disparate finance systems to a harmonised online SaaS ERP system, should generate some operational cost savings, as well as business benefits from process standardisation and shared services. There may or may not be associated benefits in the hosting infrastructure depending on the existing level of consolidation and virtualisation of the physical assets and support services. On a like for like basis, whilst the internal IT Operations labour costs should go down, it is possible for the (non-transparent) embedded hardware and related costs to go up. So you still need to “follow the money” by looking at the wider TCO benefits or disbenefits as well as just getting excited about the shiny new toys.

Sourcing the right solution, both software and implementation partner together, is crucial with a guiding commercial-technical design considering the target operating model, business and technology architecture, commercial and TCO levers, and beyond that potential for business operating model transformation to deliver the goods

Beware the devils…

Footnote

In furtherance of technology understanding, I used the DALL-E AI to generate the featured image at the head of this post. Here are some of the other ideas it came up with…

It is fashionable to concoct phrases to create neologisms to try and make other people think the neologisers are somehow just so much smarter. Sometimes the new terms created are actually meaningful and sometimes just Deepak Chopra-style nonsense B*S. Non-linearity is one of those sort of tag phrases that has been dragged kicking and screaming out of the world of mathematics and physics with mixed results.

Non-linearity has a sort of smart feel about it, linear = simple, straight-forward and actually only quite a small part of the universe; non-linear is quirky, eccentric, and a bit edgy, and pretty well most of the universe.

You can google for quite a few things that you might expect to be non-linear, like…

• “non-linear algebra”
• “non-linear dynamics”
• “non-linear control theory”

…and a whole lot more things that you wouldn’t necessarily…

• “non-linear thinking”
• “non-linear innovation”
• “non-linear people”
• “non-linear social network”
• “non-linear politics”
• “non-linear justice”
• “non-linear economy”
• “non-linear clothes”

Apparently non-linearity is a thing in physical architecture now…

The so-called nonlinear architectural design is the thing that using the essence of architectural complex as a starting point we get multiple factors affecting buildings through analyzing, which we organize through the parametric model by reasonable logic in designing, and finally use the computer to create complex forms according with the requirement of architectural complexity.

The Realization of Nonlinear Architectural on the Parametric Model – MinWu, Zhiliang Ma, 2012

No, I don’t know what it means either: apparently part of the architectural process these days is to take photos of stuff or maybe existing artwork, stick that in Photoshop and trace out something that then looks like a Dali-esque bad dream or a bad acid trip.

You can see it in buildings like the Bella Sky Hotel in Copenhagen, which is quite dramatic

In the Bella Sky, there is some distinct sacrifice of function subordinated to fashion in the large amount of steel that you have to walk around in the rooms. It is however very democratically configured in diagonal form, so anybody of any height can bash their brains out…

Just as an aside, the restaurant "Basalt" in the Bella Sky is a total hipster joint, offering "food from the bonfire", basically a small selection of hard nodular charred black vegetables, with a bit of sooty meat and some flavoured smoke 🤯

Back to something more like the real world of the supply chain, the old-world view is that of the linear supply chain like this…

However, that has been tagged by non-linearity, if you google “non-linear supply chain”, with the most obvious examples being current visualizations of the circular economy where the Worm Ouroboros eats its own tail with recycling.

Deloitte made a rather gruesome rendering of the future state in their “Supply Chains and Value Webs” story where the world ends up as an entropic collection of blobs in a bunch of value webs, which looks a bit like this…

Consultants are often very good at come up with ideas that so hi'falutin' and analytically dense that they cannot be handled by mere mortals.  A world built of that value web complexity obviously needs a load of consultants to help make sense of it.  
Also on the topic of complexity, I recall seeing once an IT systems architectural concept of "white spaces" which manifested as a spreadsheet that mapped out the intersections between different systems, but was ultimately a very sparse matrix, of guess what, mostly interstitial white space, which didn't really do anything to simplify the situation

From an engineering perspective and also for the sanity of us mere mortals, the sort of tangled mesh represented by “value webs” is not sustainable and a more rational structure is essential. So you have to draw the threads together and create some level of coordination and organising principle which supports the non-linear structure but glues it all together, thus…

These are the types of “non-linear supply chain” model that are currently tagged with “Digital Supply Chain” or “Industry 4.0” monikers to freshen them up and make them seem modern. However, there is nothing new under the sun, of course, and these are actually retreads of ideas from 2000 and behind (e.g., from the CPFR concept of the 90s). (I have a slide on this topic I used in 2001)

In software terms, and back to the start of this story, that structure with the central “digital eco-system” might be classed as a “non-linear software architecture”, oddly enough when I googled that term I came up with no results at all!

So maybe I can claim to have coined that term myself? Whichever way, when people start talking about “non-linear software architecture”, remember you heard it here first!