Results-Oriented Decision-making, and the Hidden Cost of ‘Free’
You get what you pay for, the old adage tells us. But in our modern world of automation and open-source software solutions, does that saying still hold true? Business services remain a buyers’ market, and we have become somewhat accustomed to decreasing prices and sophisticated, free-to-use alternatives to expensive proprietary software.
On appearance, it is the ideal scenario: where we are able to access services that provide adequate functionality, while saving money. And, although the economics behind open-source enterprises may be something of a mystery to many of us, we are less inclined to ask any difficult questions while we believe we are getting a good deal. After all, questioning whether you are getting “value for money from your free software” would seem impolite at best – and perhaps even a little bit daft.
But this attitude needs adjusting: the question is a valid one.
Trade Off: Price and Performance
In business we have an instinctual understanding that “free” is rarely anything but that. So why do we fall into the trap of looking first to the bottom line when making decisions, and only begin to consider factors such as suitability and functionality after considering the cost? It is rare that a business will consciously choose to limit its own productivity with under-performing facilities, so why do we still default to the cost motive when it comes to decision-making and procurement?
The answer is that it is a habit we are often forced to adopt early on in our careers as business leaders, and rarely re-assess. It is understandable that a smaller enterprise will – at the very start of their business life – focus on survival in the short to medium term. In this situation, budgets are finite and income may be unpredictable, and preserving liquid capital is top of the agenda. So it is not difficult to understand why a free alternative might be seen as an attractive proposition under these conditions.
It is a sound strategy, but one which can throttle growth once you have gained a foothold in your industry. Many managers are unwilling to relinquish their tight grip on the purse strings, to the detriment of their enterprise. Consider it this way: as soon as survival is no longer your primary challenge, your outgoings are no longer your primary consideration. It is a difficult habit to break, but successful business leaders have all learned to re-evaluate their decision-making processes. When they choose software, they are buying for where they envision their company to be in the future; not where it is today.
Avoid false economies
A healthy business is always seeking to develop its operations, and to remain agile and responsive to new opportunities. Growth, efficiency, and expansion all cost in the short-term, but with the understanding that these outgoings will be addressed by increased turnover going forwards. Failure to lay the foundations for growth means a failure of vision and direction for your enterprise. For many of today’s businesses, software systems are that foundation.
When procurement decisions are informed by budget, choosing a system with additional features or a versatile architecture may appear to be the more expensive option. However, limiting your business capabilities by selecting a software service that only addresses your current activities is a false economy. Let us consider some of the most obvious limitations:
Technical support and maintenance
Every IT system requires a dedicated team of support staff with an in-depth technical understanding of the product. Problems will inevitably occur and, all too often, this is the moment when you discover the hidden costs of your free software. Open source developers have to make a living too, and if they are giving away their systems without charging for a licence, then they will often charge a premium for installation, maintenance, and support services, as well as add-ons and expanded functionality. Once you are committed to a product, and your system has gone live, you can find yourself trapped with unavoidable additional payments which far exceed the initial up-front costs of the proprietary alternative.
Training and Orientation
There are other costs associated with installation, too. Beyond expensive support services, a software solution which requires constant upgrading and replacement is one which will force your workforce to constantly update their skills and knowledge. A single, up-front software solution allows your staff to develop their skills organically: using a system that is already familiar and in place, as and when they are called upon to complete a new task.
The Key to Sophisticated Decision-Making
These are just a few of the more compelling reasons for taking time over your procurement choices. But how can we ensure we are steering our businesses towards their greatest potential, in every decision? The simple solution is to gain a genuine understanding of your options, before you commit to any of them. A lower price may be attractive at first glance, but does the cost incentive withstand a closer assessment of the hidden fees,, the decreased functionality, or the limitations placed on your company’s ability to operate and to compete?
It would be wrong to suggest that open source alternative which charge fees for additional support and content are inherently worse for your business than the proprietary option – just as it is wrong to believe premium services are an unjustified expense. They are simply two different business models, and consumers benefit from the choice of having both. But it is a benefit that relies upon informed decision making that goes beyond the bottom line.