true cost of ownership giving away your dollars

Why The Total Cost of Ownership Really Does Matter

Why Total Cost of Ownership, or TCO, Matters.

Many clients coming into the Clearinity Process have not had experience with ERP systems, cloud-based inventory systems, or sometimes even basic warehouse management systems. Other clients are coming to us after having had a horrible experience implementing their first system.

If you’re a client like this (first or second time with a new system), our goal is to set your expectations. To help your team understand the magnitude, and the value, of what your team is about to do.

Let’s use a perfect scenario. Imagine Jim is a one-person company, has experience with ERPs, is a smart data guy, knows his data inside and out, and has helped other people through this before. He’s a pro! His experience level puts him easily at a $150 – $200 per hour value. For someone like this, 20 hours could be more than enough time to learn a cloud-based inventory system from scratch and implement it right on his first try. For him, this TCO is:

$250/hr * 20 hrs = $5000 of value

However, a system’s implementation is a complicated thing. We can group those complexities  into three arenas people, process, and technology.

Let’s look at Jim’s brother, John, doing the same thing. John is also running his own company, trying to replicate Jim, and he’s pretty good but doesn’t have the intersection of accounting, software development, and data integration that Jim does.

Now, this is where some pause and say, “WAIT, Jim and John shouldn’t be charging the same hourly rate!” We agree. It wouldn’t be crazy to say that John, being valued at $150/hr, would take at least 65 hours of configuration instead of 20. We know from taking data over. 

$150/hr * 65 hrs = $9750 of value

So what if your organization is multiplying rapidly, you are unsure how to engage with software, unclear about internal communication, and have very few processes set? We have data that shows where your team is at if you’re a Clearinity Stage 2 business.

$50/hr * 10,000 hours = $5,000,000 in value

This example also explains why a company in Stage 2 business maturity growth really can’t even think about this yet. It’s entirely outside of their realm of experience. It’s like asking a fish to climb a tree!

The reality is that your experience is going to fall somewhere in the middle. Your Total Cost of Ownership for a Cloud Inventory Implementation is quantifiable and something worth discussing internally.

Not sure how to move forward? Give us a chat