In technology, there are a large number of vertical markets where the systematic application of the Lowest Qualified Bidder has led to perverse results:
- a reduction in competition by making it impossible for new entrants with new technologies to justify an R&D and go-to-market effort;
- a gradual elimination of smaller suppliers
- the creation of oligopolies where a very small number of large players cut their R&D and innovation costs to remain the lowest bidder.
After a few decades of this regime, entire sectors are left with obsolete technologies, and at the mercy of oligopolies.
Procuring a HCM system is an opportunity to modernize the way you manage the most important resource in any organization, your people, and should not result in acquiring the lowest cost system that is typically the least efficient and the least up-to-date.
It is possible to judge what would be a smart budget for the organization, and publish it, and then let competitors present the quality they offer; this method will result in a fair value for the expense and the best possible modern scalable systems.
By far the most expensive acquisition is a weak system at a discount that will require compensating with small, non-integrated parallel systems, Excel files, manual processes, etc.
And there is more to this disheveled approach today: people’s personal data ends up in multiple copies in unsecured systems, highly vulnerable to malicious access.
All for the sake of trying to save a little money on the initial acquisition, which represents “peanuts” in the grand scheme of things.
And you won’t know what you’re missing because the best solutions won’t want to waste their time competing in a lowest cost market controlled by an oligopoly. When an oligopoly is well established without competition, the lowest prices cease to be low prices… and become the lowest of prices all exorbitant in relation to the quality delivered.
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