We have all heard the old adage ‘penny wise and pound foolish,’ but it has never been more evident than in today’s “cloudy” world. I love to get a good deal, but I hate wasting my time and money on cheap things that fall apart. A good tool is worth way more than a cheap one that does a crappy job. The same is true for business management systems.
Part 1 of a 2-part series
We have all heard the old adage ‘penny wise and pound foolish,’ but it has never been more evident than in today’s “cloudy” world. I love to get a good deal, but I hate wasting my time and money on cheap things that fall apart. A good tool is worth way more than a cheap one that does a crappy job. The same is true for business management systems
More and more software companies are moving to subscription services over perpetual licenses. Many accountants can show you how over time you will pay more for the software than if you buy the licenses, and this is especially true if you go off maintenance. If you choose that route you are buying planned obsolescence for what could be your most important technology purpose.
Consider when you subscribe to software in the cloud you are buying more than just software, but continuous upgrades and improvement in functionality. You are buying agility and, you are paying less up front!
So consider these 5 reasons why paying less up front can be more value and why paying more over time can cost you way less!
- Time value of money – We would all rather hold onto our cash than spend it up front and often do not factor in the cost of capital or the opportunities we forgo by investing cash in one opportunity at the expense of another. We have seen companies invest in a new piece of equipment rather than investing in a new business management system because the return is more tangible and known to an operationally minded individual. With subscription licensing and cloud computing you can often have both
- The compound effect of momentum – the cloud and our ‘Start & Grow’ implementation program are designed to get you a quick win.
- Simplicity vs. Complexity - It is so much easier to effect change when you change one thing at a time than if you change 10. By running a continuous upgrade and improvement model, you reduce the risk of failure due to complexity.
- Learning Curve – Related to the compound effect and simplicity is the learning curve. Every software has a way it thinks. By learning the software with a simple quick win, your team will learn how the software thinks. As you add new functions the learning curve will be shorter. Furthermore, your team will be able to take a larger role in the implementation, lowering your implementation costs, as they progress through the learning curve.
- Return on Investment (ROI) - When doing an ROI calculation, the quicker you begin to get a return on your investment, the better the calculation becomes. The lower the upfront cost, the quicker to a payback. If you get value each time you add a grow package; the ROI is almost immediate.
Quick wins, like Level 3 credit card processing, with our simple module and no upfront cost, create an immediate learning curve while you are widdling down your excess inventory. The combination of quick wins can provide you a quicker positive cash flow. The agility of the cloud can get you continuous improvement faster and at a lower incremental cost. In part 2 of this series we will do the new math of Cloud and the dramatic effect of our Start & Grow program on your cash flow.
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