Swagman Systems Design Inc.

Do You Know What Your Business Problem is Costing You?

You have identified that a function or system within your organization is causing a problem. It is not giving you the information you require, not performing exactly the way you need it to, or not giving you the results you need to get the job done efficiently and effectively. You require a solution in order to alleviate the inefficiency.

You set yourself a budget to find and implement a solution to the problem. You put out several RFQ's only to find out that everyone has a solution that will cost at least twice or three times what you wanted to pay. So you go back to the drawing board and scale down your requirements, look for alternative solutions or simply give up and put the whole thing off to a later date. Meanwhile, you still have a problem that is interfering with your company's performance.

What is the REAL COST to You if the Problem is Left Unresolved?

Many companies fail to ask themselves this vital question from the very beginning. The reason this question is so important, is because the answer could mean the difference between wasting money and turning a profit.

Is it Worth Fixing the Problem?

Is the problem worth spending any money on at all? Have you critically analyzed the impact of the problem on your overall operations? Is this a problem that a software solution will solve or is this a problem resulting from a procedural issue? If this is a procedural problem, new software will not solve the problem if the underlying procedureal issue is not addressed.

Does this problem significantly impact your bottom line? Companies have been known to throw large sums of money at solving problems that do not impact their bottom line. Attempting to fix the problem might have negative effects, making it worse. In either case, the money spent is likely to be a total waste. It is important to understand whether your problem is significant enough to spend time and money on correcting.

Even when a problem is worth fixing, a company may not deal with it in a timely manner. They may fail to realize that it will cost them money just simply because it exists. Every day that it is left unresolved, their bottom line is affected. Projects are often put off because it is perceived to cost too much to fix even though a thorough cost-analysis of the problem has not been conducted. This short-term view can end up costing a company much more in the long run.

How Much Should You Spend?

Once you have identified that a problem is worth addressing, the next logical step is determining how much money should be budgeted for a solution to the problem.

Conducting a cost analysis of the problem can clearly identify how much it is worth to your company to find an effective solution.

Included in this analysis should be a calculation of how much the problem is costing the company in its current state. How much revenue is lost due to an inability to capture vital information, or lost production, or down time, or whatever the end result of the problem? What expenses are being paid out in lost employee productivity? How long are you prepared to lose money as a result of this problem? The answer to all of these questions is the key to identifying how much it is worth to you to fix.

Calculating your ROI:

A simple way of looking at it is this: if a problem has cost you $1000 a week for the past 52 weeks, is it worth it to pay $5000 or $10,000 to find a solution? If you have lost $50,000 a month in revenue over the last 6 months, is $20,000 a reasonable price to pay?

Logically, any price up to the amount it is costing you will be a cost-benefit, however, only you can decide how much it is worth to you to alleviate the problem.

The more information you have to work with by the time you talk to solution providers the better. It will then be easier to determine which provider has identified the best solution for your company and has quoted the price that best matches the investment you are prepared to make to turn your problem into an asset.