The True Cost

My company uses a lot of open-source software, including the CRM system and email system. We use this software because it’s cheap. Except, it’s not really cheap when you consider all the man hours and system crashes we endure on a near-daily basis. What’s the true cost of this “free” software? Let’s take a look at a few unfortunate costs, shall we?

First, the IT costs. In theory, these costs are fixed overhead, since the IT team is on salary. But how long do you think you can keep their salary at the same level when they’re at the office on nights and weekends fixing a system that’s constantly broken? How many revenue-generating or cost-cutting programs can’t be implemented because the IT team is too busy wrestling with the open-source software that’s “saving us money”? It’s not just about the direct expense of the IT team’s time, but about the opportunity costs of having them focused on something that should be a given in a business environment.

Next, there’s the productivity issues. The CPAs in our Accounting department are required to complete a certain number of class hours every year. They are allowed to do this on company time via online webinars. Again, great in theory, costs nothing in theory. Except that 3 out of 4 of their webinars have crashed 45 minutes into the presentation, which means that they don’t get credit for that webinar. They’ve now wasted 45 minutes and will have to re-take the webinar and hope that the system doesn’t crash, again wasting 45 minutes and resulting in re-taking the webinar. That’s just one example. I’ve had my internet and network go down for an entire day. Sure, I could work on some designs… but I can’t email them to anyone for feedback or tweaking. Sure, I could just print the mock-ups for feedback… except that the printers are on the network, so no internet and network access means no printing. There’s other people that can’t even work on designs, so if the network is down, they are literally sitting at their desk twiddling their thumbs! But hey, it’s FREE!

Finally, there’s the cost of information and time. One time, the system went down, and we had lawyers sitting on the phone, waiting for a document to come through. These guys charge several hundred dollars per hour, and we were on a deadline with a bank, whose lawyers were also charging hundreds of dollars per hour. We had them on hold while we tried to fax (yes, this is in 2012!) a document because just as we sent the document via email, the system crashed. The CRM system still has bugs that don’t allow us to glean all the information we need out of it, so management is still flying a little blind. They didn’t want to pay for a CRM because they thought the sales reps wouldn’t use it. Now we’ve proved that the sales reps will use the system, but the system is still broken, so their motivation is waning! They spend time trying to input data, I spend time trying to pull out the data, and IT would spend time fixing the bugs… if they weren’t so busy fixing the email system that crashed. AGAIN!

In short, our free or cheap software is actually costing us a lot of time, headache, and ultimately money. Before you start claiming that your inexpensive solution is great, make sure you calculate the true cost. You might find that you’re paying more for less!

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