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Tech Trap No. 6 — Selecting Products Based Solely on Price
Editor’s Note: Following is the sixth of our ten part series called “Technology Traps
and Mishaps,” by Fred Ode, CEO, chairman and founder of Foundation Software.
State-of-the art Techno Pro XP: $5,000
Eight hours of Techno Pro XP training: $1,200
The benefits that you gain from owning Techno Pro XP? Priceless!
Okay, so I borrowed a little
from the credit card ads
we all know so well. But
you get the idea. When
it comes to purchasing
new technology—or anything else
that meets our needs—price is completely
relative. What matters most
is that a painful (or costly or inefficient)
problem will be solved. If such
a technology solution can be found,
the investment can become, well,
priceless.
Unfortunately, many construction
owners approach new technology purchases
with an overemphasis on price.
What’s more, their concept of price
is often a simplistic definition that
looks only at the technology product
price tag and ignores the necessary
costs associated with it. These related
costs may include:
1. Time and effort to research
products
2. Time and effort to implement a
product
3. Additional hardware or software
needed to support the product
4. Training and education of users
5. Ongoing technical support
I have found that price-focused
technology shoppers usually fall into
one of two categories. The majority
are those who first define what they
think they can afford instead of what
they need. Price becomes the No. 1 criteria
for the selection process. On the
other end of the spectrum are those
who believe that acquiring magic bullet
technology is most important,
no matter what the price.
Be Penny-Wise,
but Not Foolish
It really doesn’t matter whether you
spend $100 or $20,000 on your next
technology solution. What matters is
that it fits your company’s needs and
produces a competitive advantage.
Buying too little or too much technology
to meet the needs of the business
can both be costly mistakes.
Contractors who buy too little,
(usually because of an unrealistic technology
budget) end up with products
that fail to meet their immediate and
future needs. A contractor looking to
replace his company’s outdated spreadsheet
accounting system, for example,
decides that an off-the-shelf small
business accounting package is the
best option within their budget. Six
months later, after countless hours
spent importing data and training users
to learn a new program, the product is
proving to be inadequate. It’s unable to
track billing, handle payroll or produce
needed job costing reports (without
duplicating their painfully slow spreadsheets).
Having spent far more time and
money than originally planned, this
contractor is looking, again, for a new
accounting software solution. So how
does a contractor come up with a realistic
budget for their technology investment?
One way is to consider the hidden
costs of not investing in technology.
Holding on to an antiquated construction
accounting system, for example,
might incur the following costs:
1. Indirect costs of not having realtime
job cost data
2. Indirect costs of having to create
off-line reports on spreadsheets
3. Indirect costs of duplicate data
entry
4. Frustration and time spent with
inadequate customer support
In short, if more contractors took
the time to assign dollar amounts to
lost productivity and inefficiencies
of operation, it might lead to a more
realistic new technology budget.
Buy for Fit, Not for Fashion
Lots of people who buy technology are
actually looking for a magic bullet.
They think technology—and usually
a higher-priced technology solution—
has the power to miraculously bring
about organizational and procedural
changes on its own. Instead of selecting
a product that will help to increase
efficiencies and build on their unique
strengths, they end up with an ill fitting
product that is likely to create
its own set of problems.
What most of these tech-buyers
don’t get, obviously, is that not every
technology is right for every company.
Just because a product comes with
lots of high-tech features and state-of-the-art gadgets, or is priced higher
than any of the competition, doesn’t
mean that it will have any value
for your particular company. What
matters most is that the technology
fits into the company’s overall business
strategy and that the company is
committed to using it effectively.
Ideally, contractors would love to
find the invaluable technology products
that solve all their problems
and help boost profits. But all that
comes with a price. The price includes
understanding all the costs, all the
time and all the resources needed to
find the perfect-fit product and make
it work to your company’s advantage.
Now that’s priceless.
Fred Ode is the CEO/chairman of
Foundation Software, developer of construction
job cost accounting software
called FOUNDATION for Windows. For
further information on FOUNDATION
for Windows, visit www.foundationsoft.com.
Fred Ode can be reached directly
by phone at 800.246.0800 or e-mail
fred@foundationsoft.com.
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