When you are about to automate something, be prepared to spend five times as much as you initially think.
I’ve written about the difficulties of automating your logistics business—the fact that you don’t have someone you trust 100%, that software projects fail big, that it’s risky to trust an IT person. But what can you do about it? After some thought, the five-times-more is one rule I came up with.
What does “initially think” mean? It means that if you contact some consultants or companies, and they make some proposals, and you choose a solution that is priced at 100k and will take six months to deliver, assume you will spend a total of 500k in the first two years. I’m making these numbers up, but they’re not random. It’s a gut instinct.
The reason is that, as the Twitter story illustrates, you will need to create and recreate stuff, and recreating is more expensive than creating.
Sometimes there is a mentality of “we spent so much to make it so we are now going to keep it”. That’s wrong. If scraping it and rebuilding it has a positive return on investment, how much you spent to make it is irrelevant, as is whether it has paid for itself so far.
Building good IT can take several years, and I’m not talking about the hardware and software infrastructure, but about having the right IT people in the right place. It needs trial and error. While this is true for other areas as well, with IT the road is bumpier and it’s likely you’ll need more trial and more error and even more trial and even more error.