Many business owners make poor decisions when they purchase information technology, wasting money on products they'll never use or need. Here's how to avoid making common mistakes.
Do you remember the episode of All in the Family in which a salesman gulls Archie into buying aluminum siding even though the Bunkers' house is made of brick?
The technology equivalent of that situation--a kind of dim-bulb Gift of the Magi--would be something like buying Windows diagnostic software for a Mac, and it probably doesn't happen very often. Still, businessfolk make plenty of poor decisions when it comes to choosing computer equipment. Befuddled by a sales pitch delivered at Pentium II speed or swooning at the sight of a 16-inch flat-screen LCD display on a customer's desktop, they pitch their nickels at the high end, paying for features they'll never use. In that respect, at least, technology products resemble personal relationships: pursuing both, we tend to confuse what we want with what we need.
Diane Carco sees a lot of that. Carco is the coauthor, with Brad L. Peterson, of The Smart Way to Buy Information Technology (Amacom, 1998), a book aimed principally at big companies with big information-technology budgets. But in an earlier life, she and her brother were partners in a $2-million marketing and advertising company in Milwaukee (he's still carrying on the business), where sibling rivalry manifested itself in squabbles over procurement. "His mind-set was more keeping up with the Joneses," says Carco. "Mine was looking at the value that an individual purchase would bring to the bottom line."
Carco says too many small-business owners go looking for a "solution" (I use the word because Carco does, not because I like it) before thoroughly defining the problem, leaving them vulnerable to high-pressure sales tactics. Complicating things further is purchasers' often-squishy understanding of what it is they're buying. "People know the benefit of a chair," explains Carco. "They may say, OK, the leather feels a little better than the cloth, but I can live with cloth. With software they can't visualize what the end result is going to be."
That que sera-ness often produces irrational optimism. Disillusionment is inevitable. The situation is particularly dismal for companies that spend now for features they might need later, only to discover six months down the road that technology doesn't wait around to be grown into.
Carco says CEOs can obviate such mistakes by assessing the return they expect from every technology investment. For example, will upgrading your inventory software to improve response time from two seconds to one and a half have any meaningful impact on your productivity? Doubtful. Counting on intangibles (I see something hazy in our future. Wait, it's coming into focus. Oh, look! It's global sales on the Internet) or falling in love with sophisticated features just because they're so damn lovable is also dangerous. The goal is to purchase not the best product but rather the best product for your business. That means applying to the procurement process a degree of specificity and subjectivity that traditional best-buy advice simply doesn't support.
With that in mind, we've created a new department on technology buying in which the emphasis is squarely on the purchaser rather than on the product. Shop Talk, which debuts in this issue, will track small-business CEOs as they size up their business needs and then set about fulfilling them. We hope that their decisions--how they determine a technology's value, what products they reject as well as what they finally buy--will guide readers in pursuit of their own (oh, what the hey) "solutions."
LEIGH BUCHANAN is an editor at large for Inc. magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan