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Show Buyers can reduce first-year computer costs When J. Stephen Shattuck. partner in the Big 8 accounting firm of Ernst & Whinney E& W ), makes a slide presentation, his grabber is a slide showing the risks of unplanned computerization: (1) Less than half of all minicomputers (costing $50,000 plus) are used as planned. (2 ) Less than half of the computers are operational within a year of the target. (3) Over half of the systems cost more than three times what was planned. Shattuck, who's in charge of information systems consulting services ser-vices for E&W, recently cited for us a typical case, a wholesale hardware company that budgeted $110,000 to computerize accounts payable. The computer, which arrived in January, wasn't even operational until July. And by the time the firm called Shattuck in, it had paid an unbudgeted $60,000 for temporary help to put its records onto the computer and was well on its way to spending double in unbudgeted expenses what it had spent for the computer. Alan L Goldberg, with Deloitte, Haskins & Sells (DH&S), another Big-8 accounting firm, has a degree in electrical engineering besides an MBA. He told us of a steel distributor who, planning to spend $200,000 on a computer system, first brought him in. "They ended up spending only $150,000 including our fee. The computer they'd have chosen without us wouldn't have done the job. And if they'd bought it, they would have spent probably another $100,000 making it work." Even small companies lose heavily when they buy computers without proper planning. Shattuch says he frequently hears would-be clients brag, "Heck, without any help from you I can buy an IBM ; personal computer for $5,000." What the client doesn't know, he says, is, "It's going to end up being a $20,000 or $25,000 installation. Treating it like a $5,000 investment is folly and bad management." We did the next best thing to your hiring either of these huge accounting account-ing firms for advice on buying, installing, and managing a computer. com-puter. We've compiled an executive summary of what you'd hear in your first meeting with them. (1) Forget the myth that computers com-puters solve problems. They don't. You have to first tell the computer what the problem is, and then how to solve it. If you can't do that without a computer, you probably can't do it with one either. Before you buy, identify what problems need solving. Then find out what kind of programs and what kind of a computer if any can solve them. (2) Choose programs (software) before hardware. Lots of fine computers are on the market, but not so many fine software packages. If you can't find suitable off-the-shelf programs, the alternative is to have them custom written. That can consume years plus thousands of dollars. (3 ) Shop for a computer using the same caution with which you'd buy a used car. No matter whether you're buying a $1,000 TRS-80 or$l million IBM 3081, get EVERYTHING in writing: price, delivery date (for every piece of equipment and software), guarantee, service, who will do the training and where, who has to get the system operational, '""WWIWWWIiBJ It. I and what happens if the system doesn't work according to your specifications. (4 ) Plan to redesign your site, even if you're buying one desktop computer. (Definition: a desktop computer can occupy all of one desktop.) Plan for power outlets, telephones, cabinets, anti-static carpet, car-pet, etc. (5) Plan to convert your files. Technology that'll feed paper files into a computer is very expensive. Most companies must plan on people sitting at keyboards typing it all in. (6) Plan to train all the people involved, supervisors as well as hourly personnel. (7 ) Plan on the cost and delivery time of computer supplies: special paper, magnetic disks, printer ribbons. (8 ) Plan on annual maintenance of 10 to 20 percent of the computer's price. (9) Plan time to get the software working the way you want it to. It almost never does right out of the package. HO) Plan to reassess your system after six months' use. Final advice from Shattuck: "Accept an 80 percent solution to problems when you computerize. That extra 20 percent can double or triple the costs and headaches of computerizing." If you write, we'll send you a free computer planning guide from Alan Goldberg at DH&S. "The Business Computer" (tm answers questions accompanied by stamped self-addressed self-addressed envelope: The Park Record, P.O. Box 3688, Park City, UT 84060. You can read back issues of "The Business Computer" on NewsNet's on-line data base: for details, 800-345-1301. |