We’ve heard it before. Cheap always carries risk. You get what you pay for. In retail cheap goods we know are of lower quality and more likely to require replacement earlier. This applies to clothes, shoes as well as big screen TVs and the new Wheedle Website. But should any business put in mission-critical IT or marketing systems take the risk? Go for lowest tender, cheapest price all the time?
New $1m startup and trademe competitor Wheedle is a classic example of how bad it can get. Nasty software bugs and big security holes caused by poor engineering resulted in an embarrassing shutdown on 3rd October, just days after going live. From our investigation, poor planning and penny-pinching was the basic problem. TV News report
The fix? Wheedle management immediately got to recruiting replacement $15-27/hr web developers from India. Again. (Local ones are too costly it seems). It’s not so much that Indian developers are necessarily less competent. But communication issues certainly do arise when using foreign staff, timeframes blow out, shortcuts taken, a loss of control etc. Outsourcing to offshore can work, but you need a your own company [expertly skilled] staff to oversee every aspect. The extra effort required and frustration encountered often outweighs the dollar savings made. But such arguments seldom wash with naive, highly entrepreneurial company managers or their cost accountants.
Us old engineers have seen it all before. Many times. Using cheap components, cheap outsourcing, cheap training, cheap labour is all high risk stuff, yet the drive to lower costs often overrides common sense, especially when the company has non-technical people driving it. And the Wheedle managers apparently can’t tell the difference from a good coder and a bad one. They can only go on what the candidate claims they can do and hope the University they went to was a good one – Not a good way to run a new high-tech, online business. Hey, think of Apple and Trademe. . Built by engineers (coders), who also had the required entrepreneurial flare and a vision. (Let’s not overlook local technology hero Rod Drury, who built Xero).
I can’t see Wheedle coming back and making a success of it.
Big businesses make similar mistakes too. The $1b telecom mobile systems fiasco a couple years back when their new XT system repeatedly failed, doing immense harm to their reputation and bottom line. It too was a classic case of engineering shortcuts and was totally avoidable. Another sad case of a telecommunications company that had outsourced all it’s technical services to lowest tender, losing control.
The drive to save money by the running down of local skills and good engineering practices, resulted in a poorly engineered and managed system that could not reliably do what it should. The customer and shareholder then paid the price. Large companies like Telecom can often recover from these disasters, but smaller businesses like Wheedle usually do not. Sure they may make a comeback, but true success will now take longer than they ever expected.
Cheap and not so cheerful…
My point is that when dealing with technology, the push for cost reductions (or overlooking security issues) is a dangerous path for anyone to take. Especially smaller businesses. I see it in small business websites all the time. Where a keen price is required, focus is upon getting the right look. Or worse still, they decide to setup on of those MYOB or similar host-provided DIY sites, each guaranteed to be hated by Google and get very little traffic.
The hidden bad coding and poor SEO (since there was no budget for it) doesn’t show up for months when the business belatedly discovers they’re not getting any traffic or sales leads. The site is basically a dud. Whatever was spent, was money wasted.
Like the Wheedle and Telecom disasters, it’s all avoidable.