THE TRUE COST OF DIY
It’s the nightmare scenario for finance, marketing, or anyone responsible for reporting in a franchise. (Not to mention it can hinder effective decision-making for franchisors and franchisees)
You walk into the office in the morning ready to tackle your task list. You’re going to get it done. But when you sit down and turn on your computer, you realize that no reports ran overnight.
So, you spend all day running the reports again and sifting through data… while trying to figure where the system went wrong in the first place.
As a result, nothing on your task list gets done. And more than likely, the same thing will happen again soon.
The problem? You took the do-it-yourself approach to your data warehouse.
So many companies imagine a DIY / in-house set up as the ideal solution… when the reality couldn’t be more different. And with your data warehouse being the cornerstone of business intelligence in your franchise, it pays to get clued into the real story.
One of the most tenacious imagined benefits of the DIY approach is that it’s cheaper than outsourcing.
In fact, when you look at total cost of ownership for the hardware, software, staffing, and operating costs, DIY data warehouses are usually two to three times more expensive than our Done-For-You solution.
And, as you’ll see below, that’s not even counting the lost profits that come from making decisions with inaccurate or incomplete data.
Let’s break it down.
1. SETUP AND OPERATING COSTS
“Do it yourself” has a nice ring to it… it certainly sounds very cost-effective. But think of it like a home remodeling project done by a homeowner with no construction or home repair experience.
They head to the big box hardware store for materials and quickly run into problems. Hmm. How many gallons of paint should they get to cover the whole exterior? How many boxes of wood floor planks will be enough for the entire house? It’s quite easy to buy too much and waste money… or not enough and have to rush out to buy more paint (that might not match the first batch exactly) or not be able to get the same exact wood flooring.
We won’t even go into the cost of bringing in a real handyman to fix all the mistakes made by the ambitious homeowner…
In the case of a DIY data warehouse, you’re talking around $30,000 for off-the-shelf software alone.
Buying the hardware you need for your server comes with its own special problems…
Right now, you don’t know how much capacity you’re going to need. It’s easy to buy too little—and then have to spend more later to catch up to your requirements. Or you can buy too much… and have wasted that money.
When you start working with a Done-For-You Data Warehouse solution, you pay a one-time cost at the beginning of your contract to get things set up. They already have the infrastructure in place.
It’s true you do pay a subscription fee each month. But prices are kept low because the Done-For-You platform can spread hardware, software, and maintenance costs across many clients; it’s a shared cost that’s much cheaper than going it alone.
A good Done-For-You provider will follow a “pay exactly what you’re using model” so there’s no more overbuying for capacity you don’t end up needing.
2. STAFFING COSTS
Who runs your in-house data warehouse now? If you’re like many companies, it’s whomever fell into the job, usually a data analyst.
Sure, that cuts your costs. But to be honest, they’re overwhelmed and out of their depth. And what happens when that person calls in sick, goes on vacation, or puts in their two weeks notice?
If you’re serious about sticking with a DIY data warehouse, you have to get serious about staffing. And qualified candidates for key positions – yes, positions – merit in the six figures annually for their expertise.
These folks don’t come cheap, thanks to their highly specialized skills that are much in-demand.
There are three to five different job titles you’re looking at, depending on your specific needs:
- ETL Developer (to move and extract data)
- Database Administrator (to make sure the database is sanitized and clean)
- Business Analyst (to get the requirements from the franchise and make sure the right data is collected)
- Report Writer (to design build and test reports)
You might get lucky to find somebody who is good at two or three of these specialties. But these data warehouse superstars are very expensive and hard to retain. They get bored with maintaining systems. The first chance they get to build something new somewhere else, they’ll jump ship.
With a Done-For-You Data Warehouse, you don’t have to worry about staffing costs. Top experts in all the above specialties are on staff, and the cost of employing them is rolled into your monthly fee and spread amongst other the clients.
Best of all, you don’t have to worry about retention because Xerva will never quit on you!
3. INTANGIBLE COSTS
There are some costs that aren’t easy to calculate in a concrete way. All the same, they’re something you have to consider when deciding between a DIY data warehouse and the Done-For-You approach.
Think about those times that you didn’t get the data you needed because your DIY data warehouse didn’t deliver the reports you needed in a timely manner… or your reports weren’t accurate.
When you have the wrong numbers… you can make wrong decisions that will cost you dearly!
When you don’t have numbers at all… you miss the opportunity to make a potentially profitable decision.
If this happens, can you truly say you have the business intelligence you need to operate your franchise and grow it to its fullest potential?
Lost time really does equal lost opportunity and money in these cases.
Think your DIY data warehouse will always run smoothly?
In the best-case scenario, you’re well-staffed in that department. But in reality, you probably have that data analyst scrambling (and failing) to do all the needed work. Many businesses don’t track important key performance indicators for this very reason.
With a Done-For–You Warehouse, you have “one source of truth” that you can always count on. The metrics and KPIs you need to run your franchise successfully are always there when and where you need them.
DONE-FOR-YOU IS THE CLEAR WINNER
Turns out that when you look at all the costs – quantifiable and intangible – a DIY data warehouse is much more expensive than you might think.
With a Done-For-You Data Warehouse, you get effective and efficient data management and reporting from an expert team that is always there for you.
Most importantly, you get the accurate and actionable business intelligence you need to succeed as a franchise, all through a central source that is timely and reliable.
Nate McMurtrey loves using data to solve business problems. He is a Business Intelligence expert, data warehouse wizard, and pioneer in Done-For-You data warehouse solutions. He has worked as a BI manager and freelance BI consultant. In 2014, he co-founded Xerva with Nate Allphin.