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Insiduous Business Poison

InsiduousPoisonBusiness problems are business poison. They’re toxic. Not only do you have to spend resources dealing with them, but more importantly, you also have the opportunity cost(s) of what could have been accomplished with your business without these problems. These opportunity costs are so often overlooked at an incredible cost.

Pure evil.

Of course, this is a familiar problem for Smart Dolphins as every IT problem has an opportunity cost. If a law firm with 10 lawyers has a server fail and they are only able to work at 50% capacity for two days, the costs associated with the IT Provider’s products and services to fix the problem are probably insignificant compared to 10 lawyers losing three billable hours (assumption is 6 billable hours per day is the lawyers’ normal capacity) at $150 per hour for two days (opportunity cost = $9,000).

Of course, the more common and much worse situation is having many small, frequent problems, over a longer period of time. If those same 10 lawyers spend a year working at 95% because of a bunch of small, ongoing problems, the opportunity cost adds up to over $100,000 (go ahead, check my math). However, often no single problem is big enough to cause anyone to look to change the situation. This waste is just the norm and it is accepted.

Insidious.

Too many business people think their IT costs are summarized nicely on the invoices of their IT service provider. This is just a subset of the overall costs that need to be considered. Similarly, too often Smart Dolphins has the opportunity to help a situation like the lawyer-example above. We convince the prospective client that we will indeed greatly improve this type of problem. There is little doubt of this once we get a chance to talk about how we do things differently. We can even walk through the math of their own situation.

They don’t make a change.

We charge more than their “current guy” and that is a really difficult pill to swallow. Not knowing the intricacies of what it takes to lower the overall IT costs for businesses, some decision makers feel we should be able to create a better result for the same price. Easy peasy. If it was easy, everyone would be doing it for cheap.

Regardless of the inputs required, wouldn’t you spend an extra $1 to save $10? The insidious business poison that exists is forgotten and that extra dollar is so very tangible. “But it’s a dollar more.”

No, it’s $9 less.

Posted in : Business Babble
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3 Comments
  • Thanks for the comment Glenn.

    One of us isn’t understanding the other. I used the example of the law firm. The net savings (i.e. “$9”) comes from recapturing the previously lost productivity of the lawyers (or accountants, or engineers, or entrepreneurs, etc).

    An analogy: you might need to pay 10% more for a new car to enjoy the much larger benefits of better fuel efficiency over the life of the car. Your total cost of transportation will be lower by paying more for a portion of that cost (the purchase). Likewise, a business owner might find their total cost of ownership of their IT network will be much lower if they pay a bit more on the IT service provider.

    Does that help?

  • I see that the final four sentences really make the point of the article.

    Because manage-by-the-numbers types tend to be to rigorously pragmatic and sometimes demanding (“Show me the money!”) I think that the same point could be mroe persuasive with a good example.

    Pray tell: How could spending a dollar more on better IT support result in a net savings of $9?

  • This is so hard to keep in mind. I always try to use this practice with everything I purchase. Looking to buy a new car right now and this keeps coming up. Do I spend a little more to have less potential downtime…? My easy answer (when I take the time to really think about it) is yes.

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