Tripping Over The Dollar To Get The Penny

I am borrowing this phrase from a friend of mine, but it is how he described their organizational culture and made me think of several things.

• Why do people become so myopic on one type of savings that they don’t realize the entire cost of the process?
  • E.g., Driving miles to save pennies on gasoline.
  • E.g., Paying less for clothes that don’t last as long as a slightly higher priced item.
  • E.g., Buying things “on sales” even though they don’t like them as much and won’t get much use out of them.
  • E.g., Paying a consultant to help them drive down costs in an RFP when the cost savings are less than the consultant’s fees.
  • E.g., Focusing on one “square” in an RFP when the effectiveness of the solution is much higher with the slightly higher vendor such that the cost per conversion is less.
  • E.g., Buying one solution that requires them to make other organizational changes that cost money and aren’t factored in.
• Why do companies charge more when they think they have “power” only to limit their lifetime value of the customer?
  • E.g., Sprint recently told me that to synch my e-mail on my Blackberry with an Enterprise Server would require another $20 per month (never mind that they have been doing it for two years for free). After 14 years as a customer, I was annoyed. A one-time charge – maybe. A recurring charge for them to do basically nothing is ridiculous.

I remember that I once wrote a business case on limiting e-mail size which I think gets to this point. At that company, we had a limit of 20MB of e-mail storage. After being there more than a year, even if you were diligent at cleaning e-mails, you would likely begin to have problems. I got to the point where I was spending 4 hours per week cleaning my e-mail box so that I could send e-mails. I didn’t know the exact cost of storage, but if I multiplied 4 hours times thousands of corporate employees times their average salaries, it was a lot of money being wasted.