Killing the TCO

Roughly 50% of the businesses that we talk to are doing business with software that is totally inadequate for their business model. This can happen for a variety of reasons: They were sold a 'bill of goods' that never matched reality; software may work but was poorly implemented; client bought software with the understanding that debits and credits are the extent of 'business'; client's business changes and grows over time and their 'system' still runs on a DOS session.

The very first question that we often hear from these same business people is 'How much is this system going to cost?" Well, how much are you losing in revenues and expenses and opportunities because of poor business software? Have you ever put a number on it? How would you calculate the opportunity costs of good software that fits? Or of bad software that does not fit?

We are as interested in the Total Cost of Ownership as anyone. That's why we believe so passionately in on-demand, software as a services, like NetSuite: SaaS has such a great TCO compared to on-premise packages. Sure, it's going to cost more than the cheapest possible 'Debit and Credit' software on the market, but if it fits and it helps you achieve a new level of business revenue, cost control, customer satisfaction, etc., then it ends up with a lower TCO. On the other hand, if you are using an up-market package that does not get it done for your business then we really need to talk. That's the worse TCO of all.

(Note: This post was amended on January 17th because as Dennis Howlett of AccMan Pro called me out on a very lousy depiction of accountants and the accounting profession. Hey, we all get caught up some times! I have made my apologies to Dennis and to anyone else who read this, in its original form - Tom Foydel.)