In what has become a multi-year crusade for most financial institutions, sustainable cost controls remain a critical go-forward strategy. This means that low price often becomes a driving force in technology purchase decisions. Price also becomes an issue when making decisions related to the ongoing servicing and support of these technologies.
Logically, buying initially at a lower price and also lowering the costs associated with keeping things running are noble objectives. However, financial institutions will do well to consider ‘the cost of doing without’ before jumping into initial purchase decisions or ongoing maintenance programs solely weighted on “price”.
What is it?
The cost of doing without is simply the incremental hidden costs associated with reverting to manual methods during equipment or systems downtime. As new in-branch technologies are adopted, your staff becomes reliant on them quickly. Most technologies impact, in some way, staff productivity and branch efficiency. If they didn’t do one or both of these things, they likely wouldn’t be in the branch in the first place!
But what happens when the technology fails? It is true that there are manual workarounds in such cases, but these are usually slower, more error prone, and create productivity declines at a minimum. Your customer service level may also suffer. Suffice to say, manual workarounds while equipment or systems are ‘down’ add real, incremental costs to your branches.
Things to be considered…
Lower price devices, if also of lower quality, will reasonably fail more often. Frequent failures mean more time is spent doing without more often. These additive costs can quickly make-up any differences in the price of alternative solutions, negating any initial advantage of the low-cost option.
Service that is low price may also offer lower service levels. Longer response and repair times and fewer preventative maintenance calls are potential consequences. Often, limited parts availability and repairs requiring multiple callbacks extend the downtime. In contrast, service agreements that include an adequate number of scheduled PMs and those that provide committed response or repair time SLAs minimize downtime and maximize the availability of the technology. High equipment reliability and prompt, efficient service both add-up to a low cost of doing without.
So as part of your consideration of technology solutions moving forward, you should certainly ask about what the solution costs. However, equally important is consideration of the cost of doing without! How frequently will it be down? How long on average does it take to resolve issues? While no one can guarantee what your individual break/fix experience will be, these are certainly questions worth exploring!
Robert Allexon is an Independent Business Analyst and Consultant. His career spans five decades in technology-based durable goods sales and marketing and he is an expert in cash automation.