Saving money on training, support and other services can backfire, so map out tech’s true cost before you invest.
By Andrea Coombes
It’s a situation all too familiar to many business owners: You purchase a tech product that promises to solve your business problem, but you don’t have the time or resources necessary to learn how to fully implement that tool.
“The greatest challenge that I have found with respect to technology is bridging the gap between the promise of technology and the implementation of technology,” says Frank Paré, a certified financial planner and founder and president of PF Wealth Management Group LLC in Oakland, Calif.
“There’s a tremendous investment of time, as well as money, any time you purchase a new tool,” says Paré, who’s been in business for almost 10 years. “That’s time you are taking away from the business in order to learn this new tool that is supposed to help you be more efficient.”
Paré employs an assistant, but outsources most of his back-office tasks. Before he started outsourcing his IT and other tech needs, his investments in new technology services or solutions forced him to become his company’s de facto tech expert.
“If you’re in business for yourself and you aren’t hiring people who are experts per se to come in and do it for you, then you’re either relying on interns or yourself or now you’re peeling time away from your assistant to do it for you,” Paré says. “It becomes quite a challenge.”
That challenge has caused him, at times, to decide against purchasing potentially useful tech tools. For example, he considered moving from the online version of Microsoft’s SharePoint platform to the in-house version, but became leery when he got a closer look after a colleague purchased it.
“She had to hire an expert to come in and train her staff on how to utilize this new tool. It became a huge commitment in terms of time and money just to implement. The promise of [this tool] was out there but getting to it was the challenge. How do I take full advantage of what they’re promising me this thing can do?” he says.
“I have access to SharePoint and I can see the value of it, but in terms of learning or hiring someone to do it for me, I don’t need a full-time SharePoint expert,” Paré adds.
Take a step back
So, how can business owners make the most of technology’s promise? How can they solve the dilemma of preserving capital even as they strive to invest in robust tools that support the growth of their business? Each business owner must decide for him- or herself how much time and money to invest in technology.
In some cases, it’s simply a matter of declining that promise. As Paré discovered when he exchanged notes with a colleague, a sophisticated tool that might have helped optimize his business’s performance still wasn’t worth the time and investment.
But once a business problem is pinpointed and a technology solution is identified, there’s one crucial mistake to avoid, says John Mayes, a senior consultant at the Family Business Institute, a consulting firm in Raleigh, N.C.
One of the most common missteps he sees small-business owners making is trying to save money by purchasing the lowest level of tech support or training.
“Say a small-business owner has identified a pain, a need, and they’ve identified a solution to that need. I’d say in that case, the biggest mistake that the small-business owner can make is only getting 60% or 70% to the finish line,” Mayes says.
For example, he says, a business owner might look at a $50-a-month subscription service and say, “Yes, I can afford $1,200 over the next two years to solve this problem.”
The problem, he says, is they aren’t accounting for the $1,000 upfront fee to make sure the tool is set up properly, and they choose the $50-a-month subscription when the $75-a-month subscription offers a more realistic, robust level of service.
“If they don’t take into account all of that, then they’re not really solving the problem,” Mayes says.
Get a clear picture
It’s important to take a “true-cost view,” Mayes says. That means tabulating how much the product or solution will cost for the next two years, at least. Be sure to include upfront fixed costs, monthly recurring costs, annual support costs and any anticipated upgrade fees.
“Take into account the full structure of the expense,” he says.
Assessing the full cost enables business owners to determine whether that particular software, hardware or service “is a fit for the pain they’re feeling,” Mayes says.
“The mistake the business owner makes is they buy the cheap monthly solution but they never actually get a solution to their problem,” he says. “They’ve identified a real pain, presumably they’ve done the research to find a good solution and then they refuse to do what’s necessary to actually implement it.”
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