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After the Asterisk*: Getting Past the Perils of Price-Alone Network Purchases

After the Asterisk*: Getting Past the Perils of Price-Alone Network Purchases

A new strategy paper, After the Asterisk*: Getting Past the Perils of Price-Alone Network Purchases, examines how price alone is insufficient for making decisions about network installations, and how government and education policymakers should look "beyond the asterisks" to determine the real cost and real value of a network. The strategy paper provides 16 questions to aid in network cost assessment, and tips to create a total cost of operations (TCO) model to help organizations think and buy strategically rather than tactically.



 

"Internet access for only $19.95.*" The pitch is familiar. The gut reaction is the same. The price starts at $19.95 but the asterisk points to paragraphs of fine print loaded full of additional fees, charges and limitations. The deal excludes other unavoidable costs and the level of service available at the advertised price is likely to deny users the benefits they value most. What is true for home users is also true for institutional buyers. Schools have been hungry for deals in their attempts to provide students, teachers and administrators with contemporary tools and a reasonable level of network connectivity. Federal government subsidies and discounts through the E-rate program have helped stretch available budgets, but they do not cover entire categories of equipment and services needed to connect schools. Government also struggles to identify and justify network costs. Price alone is insufficient for making decisions about network installations, just as it is for other aspects of public sector information technology. Consider Washington state's decision a decade ago to move from a price alone model to a six-part criteria in assessing major IT projects. Consider, too, Utah's experience after the investment of $1.7 million in technology that was never used. Two years later, the state's Legislative Auditor General concluded, "None of the products had an adequate pre-purchase analysis."1 At issue: program and IT managers failed to distinguish between total cost of acquisition and the total cost of ownership or operations.



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