Such a Deal!

It's important to gather all the not-so-obvious costs of new technology before adopting it.

Such a Deal

There’s the story about the family that sees a sign at a brand-new amusement park that proclaims: “Today Only! Free Admission!” Skeptical, the husband asked the park’s manager if this were true. The manager insisted that it was, that the park was offering free admission to attract customers. What’s more, the manager informed him, the concession stands were giving out free refreshments.

Delighted, the family spent a wonderful day at the amusement park. As they were leaving, however, the manager told the husband he had to pay $120 before they could leave. Outraged, the man demanded an explanation since admission and refreshments had been free. The manager replied, “Oh, yes, admission and refreshments were free. It costs you to get out.”

Okay, maybe not the funniest story in the world but the point is that even when you ask the right questions before you begin a project, you have to ask yourself, “Have I asked all the right questions?”

A recent Gartner Group study, for example, reported that the cost of deploying a PDA typically goes far beyond the cost of the hardware itself. Additional software, networking, administrative and support services have to be factored in. The more capable the device, the more it costs to set up and use. They suggest that a wireless PDA used by a mobile worker may actually cost the company upward of $4,300 by the time it’s ready to go to work. And ongoing communications charges will continue to add to that cost.

It’s not that these are so much “hidden” costs as they are “overlooked” ones. These costs are included in what’s becoming the hot new concept many consultants and analysts are hyping: “TCO” or total cost of ownership. The same types of costs may be lurking behind the flashy brochure of your next system as well.

First, let me say there are some really great deals available today on hardware, software and services. Real deals, not like the one in my little story. Nonetheless, you need to know when you’re getting a real deal and when you’re not. So, what are some of the overlooked costs (or TCO components) you need to consider?

Installation and setup: Whether you’re using a VAR or an integrator, you need to pinpoint any special requirements you have that might incur additional expenses. These requirements might include workload scheduling that may dictate when the hardware or software can be installed, site configuration that might require special mounting techniques, sources of radio or electromechanical interference (RFI or EMI), radio-frequency-absorbing material (for RFID and wireless LAN applications), required interfaces to legacy systems, and so forth.

In some cases, especially where older legacy systems are involved, standardization may be a double-edged sword. Vendors that can easily interface via industry-standard communications protocols to ODBC and SQL software may not have sufficient expertise to link to older software packages or PLCs simply because they aren’t the current standard.

Maintenance, administration and support: Although this may not be a significant expense as far as AIDC equipment is concerned, most AIDC systems still require a certain amount of maintenance. Bar code printers, for example, require routine cleaning, thermal printhead replacement, and the occasional service call. Wireless LANs, as another example, may seem to be self-supporting but still require a network administrator to register new users, delete old ones, and maintain adequate security. The more complex and capable the system, the greater the demands that may be placed on maintenance and administrative personnel.

Training: This is one area many companies completely overlook. Training of key employees may be included in the initial system setup, but key employees aren’t a “fixed” asset. They have a tendency to be promoted, laid off, retire or move on. So who takes care of the system after that? Whomever you train. If you don’t have a defined training program in place, that means nobody. Training could be offered by the vendor or developed in-house. Regardless, it’s an additional consideration.

This column isn’t so much about cost as it is about planning and asking all the right questions. Implementing new systems isn’t a day in the park. On the other hand, if you’ve asked all the right questions, it doesn’t have to be a roller-coaster ride either.

Bert Moore, contributing editor, [email protected]

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