When I graduated from college, my first job was as an electrical controls designer at an engineering firm.  At about the same time that I was hired, the company also hired their first salesperson.  It was so long ago that I don’t recall his name – we’ll call him Tom.

At his previous job, Tom had a company car before he was “right-sized” out of the company.  The engineering firm was too small and too young to be able to provide such an expensive benefit to anyone; so he was in the unfortunate position of having to quickly obtain a vehicle in order to take this job.

Tom explained to me that in order to have a reliable vehicle for all the driving he would be doing with his new job, he had shopped around to find the cheapest new car on the market then added a single upgrade: air conditioning.  I recall distinctly that it was a subcompact Toyota, possibly a Tercel.

When he showed it to me, I was struck by the thought that air conditioning must not be a normal option in the base model because the controls looked like they were an afterthought.  There was a large button bolted onto the side of the dashboard labeled “A/C”.  Nonetheless, I thought he had made a smart decision: low up-front cost, none of the risk associated with a used vehicle, and a trusted brand.

But within 6 months, the honeymoon between Tom and his new car was over.

Despite being brand new, it started having problems.  Being such a small car, it was intended to be a short-distance commuter vehicle, not driving for hours every day.  Add to that the extra work for such a small car to run an air conditioning system for all of those hours resulted in a new vehicle having both the performance and reliability of an old one.  To make matters worse, with the number of kilometers he was racking up every week, the warranty was expiring quickly.

Tom ended up regretting his decision and confided that he should have invested in a vehicle that better fit how he would be using it.  The up-front cost would have been significantly more; but when weighed against the frustration, missed appointments, repair time, and lack of confidence every time he had to drive somewhere, the extra money would have been a good investment.  Back then, one of the catchphrases used frequently by sales people was “total cost of ownership”; and he realized he had succumbed to the very thing he advised prospects against: starting off on-the-cheap but having higher costs in the long run.

Why is Tom’s experience from 30 years ago relevant today?

Frequently when we start working with new clients, we hear a similar complaint:  Relatively new computers/laptops/tablets/mobile phones/etc. are not performing well.  When we investigate, we find a situation similar to Tom’s.  The client purchased inexpensive devices with short warranties that are unsuitable for the intended use.  Sometimes upgrades will help; but often we are forced to recommend replacement.  Either way, both direct and indirect costs are much higher than if they had purchased suitable devices in the first place.

If you’re running a business where dozens or hundreds of people could be affected by technology shortcomings, keep Tom’s advice about “total cost of ownership” in mind.

The Fram Oil Filter ad, from the 1970’s sums it up: Investing a little more now will save a lot later.

- Written by Scott Birmingham