Discussion on:

K-cup coffee and a lesson for IT

Patrick -

I applaud your attempt at trying to draw an analogy between K-Cups and IT purchases. But your conclusions are difficult to accept. Here's why:

1. K-cups are designed for and limited to a single-serving model. Try offering coffee to a party of 10 and you will rapidly create a queue where the 10th person will have to wait 20 minutes before the machine is available. You can temporaily solve this problem by adding
more machines, but the cost (especially if you include space and power) will quickly become
prohibitive. The same is true for "single serving" IT. In some instances the model will
work, but in many (and for those who do the math) it will not.

2. Consumer conditioning to higher prices for substituted products is a well known economic
behavior. But in the IT world, we have all been shown that things get radically cheaper
over time. Since most businesses exist to make a profit, doing things that are inherently
wasteful (economically speaking) like spending $85/month for year for 1 Tb of cloud
storage ($1,020 per year - current Google Cloud storage prices), when the same Tb can be
had in a fixed infrastructure environment for a capital cost of one half of one months rent, will quickly inflate IT's budget.

As pressure from the business to do more things with less money, the "shocklingly high" prices will become unsupportable. So your statement of cloud-services undercutting internal providers may be true for very narrowly defined usage, but overall all it doesn't add up.

3. While I agree that complex, artificially inflated chargeback schemes add little value, to suggest that rapid integration of a cost-is-not-a-factor "single serving" model is the future of IT flies in the face of reality. While it may be a model that works well for small enterprises with limited resources and few employees, it becomes unsustainable for large scale enterprises.

Did the article your wife gave you say anything about the environmental problems K-cups are causing? This falls into the realm of the law of unintended consequences. Applied to IT, one way this would manifest itself is in needing additional labor and technical resources to manage all of the rapid integration points. To me, when combined with a high acquisition cost, this activity adds very little value to the business.

I'm sure there's an appropriate K-Cup/IT analogy out there. But it's not the one you've presented.

- CASEY

Just a little perspective on the cost of K-cups. First we should clarify that K-cups are premium coffees, so we shouldn't compare to inexpensive bags of coffee. When I was still grinding (premium) beans, I was paying around $3.50 for a quarter pound. I have read that one can get from 32 - 40 cups of coffee from a pound, depending on brew strength. Let's go with 32 for easy math, which would yield about 8 cups in a quarter pound. That would be about 44 cents per cup. I order K-cups online (not mass quantities - about 2 months worth), and the per cup cost is under 55 cents. That's almost no difference in price and doesn't even include all the convenience factors. That being said, you do have to factor in the cost of the "K" machine and how it compares to the cost of a nice coffee brewer.

As clarv02 notes above, it is easy to buy K-cups in quantity for little more than buying in bulk for premium coffees--especially when you consider that there is far less waste when compared to making a pot at a time only to drink one or two cups. So the analogy would be "quality task-specific IT service" compared to "generic" one-flavor-does-all service.

As far as the claimed environmental aspects mentioned, that really depends on the K-cup user. A dedicated recycler will strip the cups apart to separate the plastic cup from the aluminum cover and mesh screen inside. Admittedly we're not all dedicated recyclers but then, IT departments don't seem to be very good at recycling either--preferring to junk reusable components rather than making them available for re-use.

into which you put your own coffee of choice. Or go all the way back and get a decent pot when you're in an environment where multiple cups of coffee are served simultaneously anyway. Serving a lot of coffee? You can have more than one coffee maker and a wait staff who know exactly what is needed for coffee on premises. You can have exactly what you need without the restaurant/coffeehouse markup.

But then, people always seem to be willing to pay way more for something outsourced than for something in-house, so the cloud has a business model in this. I wonder what the cloud services companies will do when they get bored and want to buy servings from someone else to resell?

I personally hate coffee and don't even like the smell of it as it stinks up the hallways near the coffee pots and machines. I do, however, love Coca-Cola and want to know where my free pot of Coca-Cola is? It is really annoying to me that coffee drinkers get their beverages for free and the rest of us do not.

Now, to the point of the article and all of these single serve IT services. Without internal infrastructure, how are you going to connect to them? To get the same performance as you would get for local stuff, what size internet pipe do you have to have and how much does that cost? When they break or don't work, who is going to support them? Sure, it's nice to be able to point the finger at someone else and say, "it's their fault Jane can't do her work this morning," but if it takes their support nearly a week to fix something simple (using my last "cloud" provider experience here), that's not too good and Jane's work still isn't getting done.

...consumer conditioning for higher prices for perceived convenience. We're all taught that our time is valuable. I think a lot of us OVER-value our time. We spend tons more money for these toys and then, in the end, we're out a whole lot more money.

Another K-Cup analogy is that I've tasted the results of these products, from the Keurig to the Tossimo to the Nespresso, and others. Coffee and hot chocolate, stand-alones and lattes... For some reason, they all taste the same to me, and are watery, to boot! Comparing that with home-brew, and especially a premium 'bought' cup at a chain, is no comparison at all... How long will it take for people to realize that, I wonder?