Does a $300,000 phone system make sense for you?

phone_off_hook1 In the recent past, I had the opportunity to meet with an organization’s Executive Director and their Manager of IT. They were sharing their general frustration over supporting a VoIP system that had been installed just three years prior. Not only was this system a support nightmare, it was also an on-going financial burden. I came to learn that a paid consultant made the recommendation to go with this system even though it cost more than $300,000 when other well established system brands were priced at roughly 40% less than that in upfront investment cost. I believe that it is time to ask the question, is it in the best interest for your organization to spend 40% more upfront and substantially more after the fact to purchase this industry Behemoth’s phone solution?

To answer this question, I believe that two elements should be discussed. First, why would an organization make such a decision? Second, are there truly comparable alternatives to the Behemoth’s system?

Why would an organization make this decision?

From a classic business case analysis, spending this much money for the Behemoth’s VoIP system is illogical. But we as consumers make illogical decisions all the time. How can we justify spending $80,000 on a vehicle that has poor gas mileage, high maintenance and repair costs versus purchasing a quality Ford or Toyota for less than half that much with a lower cost of ownership and better gas mileage? We explain this behavior by recognizing that the $80,000 vehicle makes the purchaser feel good. Further, it sends a message to the world. We are successful, we are powerful, etc. For organizations where cost is no issue, the Behemoth VoIP system makes some sense. They are signaling to the world that they have made it. These are the same phones that you see in the big TV series and movies. Going back to our expensive car analogy, does driving the $80,000 sedan work for most of us? Probably not.  The reason is simple. We can’t afford it. In deciding upon the Behemoth VoIP, we sacrifice spending money to help our organizations in other places. Money is limited. So, by spending more money to accomplish the same outcome, we sacrifice spending for other things that will help our organizations. This might be hiring a new customer service rep, upgrading a critical piece of equipment or hiring a new engineer. It may mean less of a bonus for the executive team (which could be spent on the $80,000 sedan.) My belief is simple – resources are scarce. If you pay twice as much for something for your business it should improve your bottom line by that much.

Are other products comparable to the Behemoth VoIP system?

This is a difficult question to answer. If you were to ask a majority of users of the Behemoth VoIP system what it is that is special about their phone system they would tell you it is just a phone. A majority of the Behemoth’s users use it to make and receive calls, record calls, transfer calls, park calls, conference call, etc. These are all features common to dozens of quality systems in the market place. Many organizations use their systems for call centers and/or they deploy unified messaging and/or they implement a presence application and many other more advanced applications. Again, there is nothing measurably different in this area between the Behemoth VoIP and numerous other manufacturers. I am sure that every product in the marketplace can lay claim to a neat feature and it goes without saying that some systems are better in some application environments than others. The most important element of this discussion is this though – in actual application is the Behemoth’s VoIP doing anything different than another quality system?

Summary

So, does it make sense to spend 40% to 50% more for a phone system? If image matters – it might be the right decision. But, if you view your phone system as a tool implemented to deliver functional value, the answer is save the money.

– George Fahr, President