ROI STRATEGIES
Why buy more networking equipment than you need?
William Kish, Coyote Point Systems
05.19.2004
Rating: -4.00- (out of 5)
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Have you even been in a situation where you were window shopping, saw something you liked and bought it without thinking about your options? Perhaps you didn't consider everything involved with the purchase, or perhaps you saw something a week later that better fit your needs, and it was too late to return your impulse buy because you had already used it. Sound familiar? The same situation can happen with IT spending. If a company doesn't evaluate its networking requirements before searching for the perfect technology to fill that need, it could mean the company will spend more than necessary on something they don't really need.
According to research firm IDC, IT spending will be 6-8% higher in 2004 than it was in 2003, but the orgy of infrastructure spending is over. Companies need to carefully evaluate their needs and determine what technology is necessary now and in the near future. Technology is so fast-moving that, chances are, the product you buy today will be outdated in three to five years anyway. More IT dollars are spent buying the product with the most bells, whistles and flashing lights than truly need be.
Probably the most important factor in any purchasing decision is determining return on investment (ROI). But before you can determine the ROI of a product, you must define your terms: What constitutes your investment and your return? If that crucial first step is missed, it will be nearly impossible to assess your ROI. In order to define your terms, think about what investment means to your company. If investment is seen as the upfront cost in dollars only, you're probably not getting the full picture.
Any new technology involves a time commitment from the administrator and user, and could come with a steep learning curve. What amount of time is required to administer the product on a daily, weekly, monthly or annual basis? That's time the company is paying for, even if it's not paying the vendor it purchased the technology from. Be sure to define the return as well. Does the purchase mean more revenues, better user experience, or fewer expenditures?
The most satisfied customers are the ones who evaluated their needs and requirements before they even looked at manufacturer specifications and features lists. The more you know, the less likely you will be influenced by marketing hype. There are a few things companies should be aware of when evaluating a purchasing decision:
- Don't base your purchase on a company's name or brand alone. You wouldn't buy a car you don't need just because it costs a lot and comes from a company with a prestigious name.
- Larger companies may try to fit your company's needs into a predefined niche category whether it fits or not. Make sure you discuss your application before committing to a technology.
- Ask for references of other companies that are using the technology in an application similar to yours.
- Ask about the vendor's customer support program and warranty policy. Sometimes, if you're not a Fortune 500 company, you may not get the level of attention you expect. If that's the case, take a step back and evaluate if that fits with your needs.
- Don't be afraid to work with a smaller, faster-moving vendor, because you may get better technology. Some larger companies aren't as innovative and move slower because they have multiple products and can't focus on just one area.
IT overselling and overspending has been going on for too long. A whole generation of IT departments have been sold a bill of goods to always buy the biggest and best product out there, the one with the most features, because you might need it "someday." The shift from deploying "nice to have" technology to "what we need" technology will continue. The reality is that all too often, if you evaluate your needs before researching products, you'll often find that you can buy what you need -- products that deliver the same value as well-known brands -- at a lesser cost. It's time to break the hype cycle and get off the overspending treadmill.
William Kish has served as Chief Executive Officer and Chief Technical Officer since founding Coyote Point Systems in 1998. He currently leads the architecture and development teams for the company and drives the company's global product strategy. Previously, Kish was president of Brown Cow Engineering, Inc, a consultant firm providing software development services in UNIX internals, file systems and networking, distributed and highly available systems and high volume World Wide Web servers. Kish provided key technology for IBM's Olympic web server, which was also deployed for the "Deep Blue vs. Kasparov" chess competition, as well as for IBM's video server multimedia distributed file system. Kish holds a B.S. from Fordham University and an MSCS from Columbia University.
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