Does frittering away money make you look more successful? Or just stupid?
That’s a question I’m asking after hearing a deeply depressing anecdote from a contact who runs a business selling financial software. The systems he flogs are fully featured, but they’re relatively simple and cheap compared to the big enterprise resource planning (ERP) systems that some companies blow their IT budgets on. Here’s his story:
“The project team of a large commercial company evaluated several systems and opted for [our package], feeling that it was more suitable, offered greater flexibility and would be implemented quicker and for less cost. After putting it to the board for consideration, the CEO came back and was apologetic but said in this case he would have to overrule the team and go for [a well-known ERP system]. The reason he gave was that he had received a number of calls from customers and suppliers saying ‘We’re concerned about your business stability -– we’ve heard you cannot afford [big ERP], so are you in trouble?’.”
I’ve redacted the names of the vendors, but hopefully the point is clear. I’m not saying customers should never take an interest in the infrastructure of their suppliers. Knowing that they’re robust, well-organised and efficient is a big reassurance. But assuming they’re in trouble because they don’t buy the most expensive system around?
Meanwhile, corporate hospitality has been heavily hit during this recession. Big company shindigs at high-profile social events are disappearing; there are concerns about sporting events attracting sponsors; even champagne sales are down on lower demand from corporates. Does this mean the businesses concerned are in trouble? Are their customers deserting them?
No. I imagine that most customers look at smaller hospitality budgets as a smart decision by their suppliers. They’d rather see keener pricing, better terms or less supplier risk than have a jolly at the races or a weekend skiing. We can only hope that kind of ultra-rational decision making continues if we see an upturn next year. Lean supply chains should be the priority — not champagne receptions.
As for wasting money on inappropriate software just to prove you’re in the big leagues? That’s just nuts.
Have you had to buy the more expensive option just to keep up appearances?
(Pic: purpleslog cc2.0)
