From: Jacob Fugal <lukfugl@...>
Date: 2006-09-12T09:56:58+09:00
Subject: The economics of a slow but productive Ruby

[NOTE: I'm trying to present the facts and be objective in this post.
I love Ruby, and would choose it any day when economics didn't matter.
But in the sense of the "Real World", this is what I discovered. And
of course, if I made any serious mistakes, be sure to let me know!]

Company QUUX is deciding on technologies for a new project. They
estimate a development budget of A and a hardware budget of B under
technology BAR:

  development budget under BAR = A
  hardware budget under BAR = B
  total budget under BAR = A + B

They are also considering using technology FOO as well. FOO is widely
reputed to grant productivity gains of a factor Y, but is slower than
BAR, requiring X times the servers. FOO developers make about Z times
as much as BAR developers, on average:

  X = servers required under FOO / servers required under BAR
  Y = productivity FOO / productivity BAR
  Z = annual FOO salary / annual BAR salary

The development budget under FOO would be reduced by the productivity
increase, but that increase will be mitigated by the difference in
salary:

  development budget under FOO = AZ/Y

The hardware budget under FOO would be increased by the factor X:

  hardware budget under FOO = BX

The total budget under FOO, in terms of the budget under BAR, would then be:

  total budget under FOO = AZ/Y + BX

Given these estimates, it would be a profitable decision to choose FOO
over BAR if and only if the total budget under FOO is less than the
total budget under BAR.

  choose FOO iff AZ/Y + BX < A + B -- or, rearranging...
  choose FOO iff (X - 1)B < (1 - Z/Y)A
  choose FOO iff [(X - 1) + (1 - Z/Y)]B < (1 - Z/Y)(A + B)
  choose FOO iff B < [(1 - Z/Y) / (X - Z/Y)](A + B)

Let's apply this estimate to the current standing between .NET and
Ruby/Rails, using the figures from Joel (X = 5, Y = 5). In this case,
Z = 1 (actually, in my comparisons, Z was slight *less* than one).

  (1 - Z/Y) / (X - Z/Y)
  = (1 - 1/5) / (5 - 1/5)
  = (4/5) / (24/5)
  = 4 / 24
  = 1 / 6

So, choosing Ruby of .NET (assuming Joel's numbers are correct) is
economically sound iff your hardware budget makes up 1/6th or less of
the total estimated .NET budget.

Now, let's assume 20 servers and a 5 year application lifespan, with a
$5K one-time cost per server, $500 annually for repairs and one
Sysadmin with a salary comparable to the developers ($60K). This
brings our hardware budget to $450K over the 5 years[1]. If this is
only 1/6 the total budget, we need to be spending at least 5 times as
much on developers, or exactly that amount per year. Using the same
$60K figure for developer salaries, this comes to 7.5 developers. So,
if you're developer to server ratio is at least 3 developers for each
production server, Ruby is probably economical. If you start getting a
lot more servers than developers however, the hardware cost of a slow
Ruby builds up on you.

Jacob Fugal

[1] It's interesting to note however that 67% of that figure is still
in paid salaries, rather than the cost of the hardware itself. If
you've got a super sysadmin who can manage 100 boxes (and you better
be paying them at least 80K if they are that super), the hardware
budget will scale a lot better. There's a lot to be said for getting
your hands on a good sysadmin...