Leveraging Standards to Drive Down Costs

I am often asked by IT persons why they should bother with standards.  Particularly Project Team people who see them as an unnecessary overhead to their project.  Architects often see them as a hindrance to their creativity.  They can always invent something better.

We have a presentation on our website on the top left that addresses the benefits of implementing OAGIS.  But I thought about bringing this to a global scale and so I did done some research on how standards save money and have found some good work out of the German Institute for Standardization.

It is entitled   "Economic benefits of standardization, Summary of results." and here are some the results:

Standards save money

The results of the survey reflect this. The businesses surveyed rate the effects of standardization on transaction costs as positive (mean value of +21.8 on a scale of –50 = very negative to +50 = very positive), indicating that transaction costs drop considerably as a result of standards, for they make information available and are accessible to all interested parties. They are therefore a factor in reducing transaction costs.

Standards improve sales efficiency

Improved sales efficiency due to decreased trading costs, simplification of contractual agreements, and lowering of trade barriers.

Standards reduce risk

The standards development process, through prototyping, and agreements by its proponents, insure standards are implementable and incorporate best practices.

Standards provide investment protection

When it comes time to retire a standards-based product, it is likely that replacements will be available (from a variety of vendors) supporting the standards.

Standards improve economies of scale

Employing standards in software components, increases the reusability of modules. Reuse increases sales and therefore the production of these components, making them cheaper to build. This further increases their usability and the competitiveness of products that use them.

Standards extend product life

Product life extension. Products that use standards are less likely to require replacement in order to integrate with other, newer products.

Standards protect against Obsolescence

Standards organizations are generally highly motivated to provide an orderly way to migrate to new versions of standards.

Standards reduce Development Time and Costs

Finding trained and experienced personnel for standardized technologies is easier than for proprietary technologies.

Summary

In summary, standards can open doors.  For example, Without the agreement to use TCP/IP, the Internet would not exist.  This did not constrain innovation, it fostered innovation.