Why reinvent the wheel . . .

When we can get an business IT solution that has  already been developed, optimized, tested and even used by thousand or even million users, why do we still want to develop our own?

A client asked me to do a peer review on a proposal submitted by his IT consultant.  He wanted to replace his old DOS systems (Believe me, DOS still exists) because it virtually crashed every week and he had to pay a few thousand dollars every year to maintain it.  His IT consultant said it would take at least 3 months and around $10,000 to develop.  My clients was very excited because his IT consultant promised to deliver a Windows application that would support multi users concurrently.

I did a very quick review on his old DOS system; it is very simple and basic, i.e. customers information, invoice, inventory…etc.  I did a quick presentation of what cloud computing was and then I jumped to demonstration.

My client couldn’t believe what he saw.  It covers everything he wants plus a lot more that he didn’t dream of, e.g. accounting, CRM, inventory, purchase, and sales.  He can access it anywhere, anytime, he doesn’t have to stay in his office until 2 am in the morning.  After I signed him up for the free trial. he can use it right away; he doesn’t have to wait for another 3 months.  But there is one thing that he was very uncomfortable, the price!  He couldn’t believe he only had to pay just over $100 per month for 3 concurrent users and it already includes hardware, software and future supports.  He asked me why there would be anyone willing to pay for $10,000 to develop a new software when you can get a software that has 10 times more features for a fraction of the cost.  He even did the number crunching himself and concluded that $10,000 can cover  up to 10 years of premium.  He said it was just too good to be true.

I spend the whole afternoon to show him the pricing structure of various cloud applications from Google Apps Marketplace, Microsoft Business Productivity Online Standard Suite, Oracle CRM On Demand, Salesforce and even some of the free applications on LinkedIn,  I also showed him some of the successful stories, e.g. Dell, Equifax, and U.S. Department of Agriculture.

Unfortunately, he still prefers to have his IT consultant to develop his own on premise software because it was too good to be true.  So I left him my question, When we can get an business IT solution that has already been developed, optimized, tested and even used by thousand or even million users, why do we still want to develop our own?

Why reinvent the wheel?  I was a little bit lost when I left his office; what else I can do / say to convince him?

Andrew Chan is the owner and founder of ALG Inc.

We help you to make better and faster decisions!

About Andrew Chan
Andrew Chan is an Business Consultant who gives you accurate, consistent and timely information so that you can make better and faster decisions. He is an Associate of Society of Actuaries with over 20 years of IT experience. Apart from strong analytical skills and proven technical background, he was also a former system director at Manulife who had extensive project management experience. If you are looking for someone to gather, consolidate, validate, visualize and analyze data, look no further! Andrew can provide the most cost effective business analytics solution so that you can explore, optimize, predict and visualize your business. Don’t guess on any decision, no matter it is finance, operation, marketing or sales! Always ask for evidence!

6 Responses to Why reinvent the wheel . . .

  1. darreneves says:

    One thing that isn’t mentioned is the ongoing changes that may happen, with the online (or indeed off the shelf/ Open Source) solutions is that updates are often free or cheap. How much will his IT Consultant charge to add a field?

    Free or cheap isn’t always a bad thing!

    • Andrew Chan says:

      There is pros and cons on everything. Cloud computing is definitely a cost effective IT solution, however, you give up “customerizations“, i.e. you can’t add / delete / modify a field, function or feature. And you would be client #12345678.

      This is why we have to find a cloud solution that fit your business needs, you can’t just pick any provider. “Head in the Cloud, Feet on the Ground” And there are other concerns, such as security, privacy and it is not unheard of that a cloud service can go down. We had one from Skype just before Christmas.

      As an professional IT consultant, I always explain the pros and cons to my clients. You get something by giving up others! The funny part of this story is my client just couldn’t believe it and insisted there must be some hidden charge somewhere.

      He even suggested that the cost could increased 10 time next year.

    • Rob Ellerby says:

      There is also the unfortunate trait that many managers have, in that they believe that their operation has significant unique characteristics that just cannot be handled with readily available solutions like the ones you outline above. Such attitudes really smack more of arrogance and/or hubris, and have little to do with the reality of the situation.

      As for the unfortunate soul you met, good luck if the price does come in at only $10,000. I can see it inflating almost immediately to $50,000 or more, because there will always be desired modifications because of the client’s inadequate scoping of the work to be done. The off-the-shelf solutions you list would have been the better choice, because of the rigorous development and testing already undertaken in a broad range of business environments.

      • Andrew Chan says:

        Hi Rob,

        I didn’t write every details in my blog. My client originally only gave me 30 minutes because he was very busy doing bank reconciliation MANUALLY. I am not an accountant but am I right that there are many accounting packages can automatically do bank reconciliation for SMB?

        So you can see he didn’t like to change! He is enjoying his comfort zone even if it means less productive.

        And you are right, the original estimate of $10,000 can end up to be $50,000 and how about the 3 months estimate? Don’t forget all the added features that he never dreamed of!

        Well, I guess I am not a good sale!

  2. Andrew so many people are afraid of change because they find comfort in “that’s the way we’ve always done it” (DOS and manual accounting? yiikes!) so they continue to chug along thinking inside the box, paying dearly for it in both time and money, to say nothing of stress because something doesn’t work quite right. If the client was so rushed he could only give you a short time his mind was likely elsewhere and he wasn’t paying attention.

    Technology advances so rapidly I’m always test driving different apps to see if they would be useful to me and/or my clients, plus it’s interesting to see what’s out there.

    • Andrew Chan says:

      Lynne,

      When I started my own business, I used to like to hear my clients told me they were busy and they didn’t have time to see me. Because I know that I can drastically increase their productivity by optimize their business processes with technologies.

      But now I understand the major road block is not technology! It is their mindset! As you mentioned, they don’t want to change! Full Stop! Then they tried to find whatever reasons to support their decisions. This particular client kept asking me if I can guarantee the premium won’t increase by 10 times or suddenly disappear!

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