Let's talk business. (micros in business) Dale Blanchard.
At the end of last month's column I said there was one more story I wanted to tell about how the addition of a computer could damage the profitability of a business. Also, since I didn't get to the concept of the computer as a tool, I said I would try to work that in. And then I wanted to talk about some traps to be avoided when you add word processing to your office. I also made my continuing promise that if I had the space I would try to look at some word processing programs. The Efficiency Trap
Let's give it another try from the top. First, the story about how a computer could damage the profitability of a business:
About a year ago I was invited to Los Angeles to address a group of vocational counselors about how computers could fit into their businesses. The meeting was held at a large hotel, and before we started, a group of us was sitting in the lounge. One woman who had spent the last five years working for someone else had just announced that she was forming her own company. "And the first thing I'm going to get is a computer," she said.
The rest of us nodded approvingly.
"And you know what I'm going to use it for?" she asked. "Labor markets."
In the system in which she worked, insurance companies would refer injured parties to her and she would develop a plan of action for finding a way to work that person back into the labor market. For her plan to be approved by the state agency she had to do a labor market survey showing that there were jobs in the occupation she had chosen for the injured person and how much those jobs paid. "I would love to be able to push a few keys and in ten minutes have a completed survey."
"How long is it taking you to do them now?" I asked.
"On the average, about four hours," she replied. "and another hour to write the report."
"And you charge $60 an hour?"
"So," I figured, "that's five hours at $60 an hour, or $300."
"How many of those do you do each month?"
"That's about $1500."
"Yes," she agreed.
"And how much could you charge if you did them in ten minutes?"
She thought for a minute. "About two tenths of an hour plus an hour for report writing."
"Let's see." I pulled out my pocket calculator. "That's 1.2 hours at $60 an hour--$72."
She nodded a little uncertainly.
"the way you are doing it now, you generate $1500 a month on labor markets. If you were charging only $72 each, you would be generating only $360. Can you increase your business enough to make up the difference?"
"I see what you mean," she said. She looked absolutely crestfallen. "But I hate labor markets."
"Then here's an idea," I said. "First, figure out if you really can do labor market surveys on a computer. If you decide you can, lay the foundation with your customers. Tell them you are going to charge a flat fee for labor markets, say $250. If everyone else is charging $300, that should encourage your customers to send you more business. If it turns out that you can do them in ten minutes, you will make an astounding profit."
The point of this story is that the woman I was talking to was about to fall into a trap that people who charge by the hour must be careful to avoid: becoming too efficient. Counselors, attorneys, accountants, and engineers are all vulnerable to that trap. The Computer as a Tool
Very often when I see people contemplating a computer for their business they see it as: with flashing lights and a fanfare of trumpets. I think that is a serious mistake. A computer should be thought of as a simple tool, something to help you in your business, not something around which to build your business.
Think of a computer the same way you would think of a company car. If you are buying a company car, there are several ways you can go, but one of the most important functions of that car is to provide transportation. In that light, many cars you could buy would be completely satisfactory.
After you have satisfied yourself with the ability of the potential car to provide transportation, you can start to look at other aspects. What kind of image does it project. Is that important? If you are choosing between two cars with significantly different prices, what will you get for the extra money? those are standard business decisions. You should apply the same principles to choosing a computer.
I remember a few years ago, when I was in my woodworking phase, I wanted a Shopmaster. Remember the ads in the back of Mechanics Illustrated and Popular Mechanics? The Shopmaster was a magical machine that could do everything. It was a lathe, a table saw, a radial arm saw, a drill, and probably many other things as well--a truly magic machine. I hungered for one. Fortunately, they were expensive. I already had a table saw, and while a radial arm saw would have been nice once in a while, I really didn't need one. The kind of woodworking I was doing didn't require a lathe, and I was able to make do with my power hand drill. I really didn't need a Shopmaster.
A computer is much like a shopmaster; it will do almost everything. More expensive computers will often do more than less expensive ones. You must decide what you want your computer to do and then make some choices. If all you want to do is word processing, there probably is no reason to buy an expensive computer with 20Mb of storage.
It occurs to me that I am using the term "computer" rather loosely. Much of what I am saying applies to the computer itself, the terminal, the keyboard, the disk drives, and the circuit boards which hold the central processing unit, the memory, etc. What I am saying applies equally to computer programs (software). It might also apply very well to printers and other peripherals which attach to your computer.
For example, let's say you are considering buying a computer to do word processing and nothing else. First, you don't need a very expensive one. You might even get by with only disk drive. When it comes to choosing a word processing program, you must decide what kind of word processing you plan to do. If you are going to do nothing but write individual letters to people, a very simple program will do. If you will be writing technical or scholarly papers in which you need to put footnotes, you need considerably more. If you want to send original, but similar, letters to people, you need a program with a list-merge capability.
When choosing a printer, you again need to analyze your application. If you will be sending hundreds of the same version of a letter, you will want as fast a printer as you can afford. Do you want letter quality (looks like it was typed on an IBM Selectric), or will dot matrix do? Again, what kind of image do you want to project? I read a very interesting article once by a person who was setting up a computer service of some kind. Although he had a very good high quality, letter quality printer, he chose to send all his correspondence in dot matrix. He was trying to convey that he had a computer, and he didn't want anyone to miss it.
What I am trying to say here is that you need to think about what you want your computer to do. What do I need this tool for? How can I best apply this tool to my business? How good must this tool be? A carpenter needs a better hammer than does a weekend hacker. Which brings me to two final pieces of advice: Don't skimp on disk drive storage and get the fastest printer you can afford.
When you are choosing a computer, get the highest capacity disk drives you can afford. There is nothing more frustrating than not being able to do something because there isn't room on the disk. Also, when you first get a computer, everything seems instantaneous. That usually lasts about two weeks. I am at the point now that any wait longer than ten seconds seems interminable. Slow printers can be a source of considerable frustration to the frequent user.
Before we leave the subject of tools, let me tell one quick story. Last month I told you about a program called Leads by Datamotion Associates, 795 Pine St. #42, San Francisco, CA 94108. Among other things Leads will find a name on a mailing list almost instantly. A few months ago I walked into a law office which uses that program to keep its client list. When I walked in, the computer printer was busily spitting out names and addresses onto Rolodex cards.
"But I thought you were computerized," I said to the attorney I had come to see.
He looked at me for quite a while as if trying to decide if I were serious. He finally decided I was. "Do you know how long it takes a secretary to switch from one program to another?"
"Forty-five seconds to a minute," I guessed.
"And how long does it take to find a name on a Rolodex card?"
I saw his point. "Probably no more than ten seconds," I replied. And that is the essence of using the computer as a tool. You use a computer when it makes sense to use it, just as you use a hammer when it makes sense to use a hammer. This office was using the computer to do what it was best at, updating and alphabetizing the mailing list. Once that was done, it was much faster to find the name on the Rolodex card. Next Month
I see that I've done it again; run out of space before getting to discuss some specific word processing programs. It is probably just as well, because one of the main ones I want to talk about hasn't arrived yet. Next month I promise to discuss some traps to watch out for as you adopt word processing. Finally, my ongoing promise: I will discuss some specific word processing programs.