Downturn Strategy: Deferring Risk To Save Cost
When we moved into our latest home, we needed a good size shelving system for the home office. We evaluated a few options, some pre-built, some custom installed, and others requiring part selection and assembly.
In order to save time and money, we chose to pick out the specific parts and assemble it ourselves.
With all the measurements taken, we purchased the parts and brought it home to install. We were full of excitement for the adventure as the heap of wood and metal pieces left much to the imagination.
We quickly found that the dimensions of each piece were close but not exact. The metal-ish connectors for the shelving, drawers, and cupboards were a little more brittle than desired.
After a few 20 mile trips on the roads of LA back to the store to swap some parts for shorter versions, we had a nice looking shelving system.
On reflection, the cost was much higher than expected.
Yes, the initial cost of buying the pieces was less than the deliverable in the pre-built or custom scenario but there is more to this than wood. In our choice to build it ourselves, we were assuming the risk that all would go exactly as planned and be without variance.
Digital Construction
If it isn’t true with small construction projects, it certainly isn’t true for large infrastructure projects - construction of the digital variety.
I was in IT for years before moving into software development and then sales and marketing.
I saw so many projects start out well intentioned and tidy only to become over budget and unwieldy — sometimes even scrapped — to the cost of tens of thousands of hard dollars, not to mention the wasted time and productivity.
At Enthusiast, I help companies and organizations avoid this cycle by only assuming the risk they want to take as it relates to their web marketing.
Buying servers, software, network components, rack space, bandwidth, and the host of other elements that could go into a web site or email marketing system and then installing, configuring, and optimizing these to work efficiently and harmoniously together is a large task.
Especially for a company that builds homes or provides legal services.
The entire process is a distraction and there is no guarantee that it will even work.
I was reading an interview with Marc Benioff that touched on this same subject:
Does this kind of economic climate, where there’s lots of uncertainty, make it easier or tougher for someone selling software as a service?
Benioff: The power of software as a service is that it’s less risk than software, no matter what. That’s because the traditional software model has you buy the software and then you attempt to implement it. The risk is all yours. You’re kind of paying up front. With software as a service, you pay as you go so the risk is mitigated over time. If it’s not right for you for whatever reason, you’re not as far into it as the old model. The old model was you bought everything–the software, the hardware, the implementation–and then you had to make the determination: Is this the right product for me?
Risk = Unexpected Cost
As both a customer of Salesforce.com and a provider of a Software-as-a-Service (SaaS) product, I agree with his take.
An added bonus is the additional risk of having an ad-hoc, unique system that you have no guarantee of success. With SaaS, you get a system already tested and working for others with a lot fewer decisions to make.
With my shelving project, I should have bought the pre-built one that fit my space and took my family to a nice dinner with the extra time and money.
I would love to help you defer risk and unexpected cost in these uncertain times. Consider our Free Search Engine Equity Score or just contact us.
To your lowered risk.
– jc
