Avoid a no-frills IT solution

by | Nov 5, 2010 | Business

I met with a good friend of mine (shall remain nameless) recently to discuss his very serious business challenge (opportunity). He needed a better way to track the productivity within his business and felt doing so would probably increase his profits by tens of thousands of dollars per year or maybe even a 6 digit change. Wow. Big opportunity!

Before I could recommend that he invest and engage in an excellent, industry-specific software solution to do this tracking, he told me that he actually already owned a piece of industry software that was known to be excellent for his type of business. Unfortunately, the software had been sitting idle for some time, waiting for upgrades to his computer network before it could be used.

For reasons I won’t touch on here, we agreed that Smart Dolphins would not be able to do work for them. So it was nice to give him some really impartial, but knowledgeable advice.

He had also already been through the process of getting several quotes for the work to be done and had found one IT Service Provider in particular that seemed very professional and knowledgeable. He was so close to realizing the large, quantifiable benefits of embracing technology, but he was stuck. He hadn’t given the go ahead because of the significant cost of the hardware and service required. However, this cost was a lot less than their annual expected gain. In short, he worried he was over paying; paraphrased: “how could these things cost so much for our small operation?”

In my review of their quote, I suggested it was a little on the high and could probably be trimmed down 5-15% with a little discussion with the IT service provider. However, the quote wasn’t unreasonable. The ongoing managed services costs were also very reasonable to my eye. Overall, I suggested that these costs would likely be paid back in the first 6 months of the investment, given the opportunity he had to improve his business by making this investment. He agreed and, here is the puzzling piece: he had thought so prior to me suggesting so.

So here is a very smart business person who was holding up on one of the biggest improvements he could make to his business because he was worried he was potentially overpaying for the solution.

I tell this story like this friend is a poor decision maker, but I’ll say this: his decision making process is incredibly common. In fact, it is the norm.

In my opinion and my experience, it comes down to people’s myopic view of the costs involved with their computer network or IT systems. It is easy to take the benefits of technology for granted or focus on price when a comma is used in the proposal for the investment required to enable technology. The benefits of technology are usually vastly greater than the direct costs you pay an IT service provider (assuming they are any good and don’t charge excessively).

Shadow ITNot so sure on my claim here? Cut the power to your office right now. The full costs of a lack of technology come clear when the technology stops working; humans tend to better recognize the true value of something after it is gone. This often happens in regards to ransomware. Businesses avoid investing in cybersecurity until they get hit by a cyber attack and then they quickly realize why they should have invested in security long-term.

Sure, you want to be sure your costs are reasonable as per the market for your IT services, but if you have three sources quoting in the same ballpark, you can probably safely choose the IT service provider of the three that offers the best overall value and move ahead. We always caution business leaders to avoid “shopping around” for an IT solution and defaulting to the cheapest option. The cheapest product or service is rarely the best and the IT provider you do not want is a company that’s focussed on cutting costs.